India's manufacturing sector continues to show strong growth.

The Indian rupee has been depreciating steadily since the beginning of the month, despite support from the weakening U.S. dollar. This depreciation of the rupee is expected to stem from investor uncertainty, as the U.S. economy shows increasing signs of a potential recession, which would directly impact emerging market countries that rely heavily on U.S. imports.

Investors are closely assessing the stance of the Reserve Bank of India (RBI) on addressing the rupee's depreciation. While the central bank has decided to maintain the interest rate at 6.5%, there is speculation that the RBI might intervene in the currency market to reduce volatility and enhance the competitiveness of Indian goods. The budget forecast for 2025 suggests that the government will only face a slight deficit, thanks to its support for the current economic environment.

The Reserve Bank of India held the interest rate at 6.5% for the ninth consecutive time in its latest meeting. The RBI continues to monitor inflation closely to ensure that it falls to the target of 4%, while also ensuring that the domestic economy remains competitive globally and continues to grow. A closer look reveals that the rise in inflation is mainly driven by increasing food prices, due to dry weather conditions that have negatively impacted agriculture, contrary to the rising demand both domestically and internationally. The RBI has projected economic growth for 2024 and 2025 at 7.2%, with the first quarter at 7.1%, slightly down from the previous forecast of 7.3%, reflecting concerns about an impending recession.

India's manufacturing PMI increased to 58.5 in July, up from 58.3 the previous month, indicating a significant improvement in the manufacturing sector. This marks the fastest expansion of factory activities, particularly in terms of rapidly increasing output, which reflects a favorable business environment and improved profitability. This expansion in manufacturing has also led to increased hiring by companies, improving the outlook for the near-term economy.

The yield on India's 10-year government bonds stood at 6.87%, recovering slightly from a two-year low of 6.85%, as rising global risks prompted some investors to return to safer assets. However, the 10-year bond yield remains 35 basis points lower than last year, due to the strong momentum of India's economy, as evidenced by an 8.2% GDP growth. Additionally, Indian government bonds have been supported by JPMorgan's inclusion of Indian government bonds in its emerging market fund, leading to a further shortage of government bond supply.

Techical analysis data (5H)

Resistance: 83.99, 84.003, 84.029

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 83.925 - 83.951 but cannot break the support at 83.951, you may set a TP at approximately 84.003 and SL at around 83.912 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 83.99 - 84.003, you may set a TP at approximately 84.029 and SL at around 83.9 25or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 83.99 - 84.003 but cannot break the resistance at 83.99, you may set a TP at approximately 83.925 and SL at around 84.029 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 83.925 - 83.951, you may set a TP at approximately 83.912 and SL at around 84.003 or according to your acceptable risk.

Pivot point August 8, 2024 09:16 PM. GMT+7