India’s Central Bank May Cut Interest Rates at the Next Meeting.

The Indian rupee has slightly strengthened following a decline in the U.S. dollar. Additionally, the rupee has been supported by a large influx of foreign capital. However, India is currently facing trade tensions with the United States, leading analysts to predict that the Reserve Bank of India (RBI) will implement a more aggressive interest rate cut. Some forecast a reduction of another 75 basis points, which would directly impact the rupee.

India’s Services PMI rose to 58.5 in March, though slightly down from 59.0 the previous month, marking the 44th consecutive month of expansion in the services sector. Nevertheless, the index reflected a softening in the pace of service activity growth, with foreign sales growing at the slowest rate since 2023. Meanwhile, output continued to expand, supported by resilient demand and sustained growth in emerging businesses. Employment in the sector continued to rise, albeit at the weakest pace in almost a year. India's service sector remains under pressure from intense price competition, leading to lower company profits.

On the manufacturing side, the Manufacturing PMI rose to 58.1 in March, above market expectations of 57.6 and higher than February’s 56.3. The increase was driven by new orders and output reaching an eight-month high, leading to a continuous rise in corporate purchasing activity. Employment levels also continued to grow at a stable and steady rate. However, foreign sales grew at the slowest pace in three months, although the growth rate remained strong. Input costs rose at the fastest pace in three months, driven by higher prices of electronic goods and electricity. In contrast, selling prices rose only modestly, as demand for goods remained steady.

India’s infrastructure investment grew by 2.9% year-on-year in February, slowing from 5.1% growth the previous month. This marked the weakest growth since September last year, with significant slowdowns particularly in coal, crude oil, and natural gas production, which all declined by over 6%.

The yield on India's 10-year government bonds returned to around 6.6% as traders sought safe-haven assets amid uncertainty ahead of President Donald Trump’s announcement of new tariffs. At the same time, the substantial inflow of foreign capital has rapidly boosted liquidity. Moreover, the RBI’s recent interest rate moves, combined with global monetary easing policies, have spurred increased investor demand for domestic debt instruments. Nevertheless, the RBI is increasingly likely to cut interest rates further at its next meeting.

Techical analysis data (5H)

Resistance: 85.697, 85.807, 86.027

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 85.147 - 85.367 but cannot break the support at 85.367, you may set a TP at approximately 85.807 and SL at around 85.037 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 85.697 - 85.807, you may set a TP at approximately 86.027 and SL at around 85.147 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 85.697 - 85.807 but cannot break the resistance at 85.697, you may set a TP at approximately 85.147 and SL at around 86.027 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 85.147 - 85.367, you may set a TP at approximately 85.037 and SL at around 85.807 or according to your acceptable risk.

Pivot point April 5, 2025 10:50 PM. GMT+7