High crude oil prices to keep Indian rupee on a slippery slope

High crude oil prices combined with fears of rising inflation are expected to keep the Indian rupee under pressure, next week. Lately, the Brent crude oil price has remained elevated due to the Russian-Ukrainian war. The price has hovered in the range of $100-$110 in the last few weeks.

“Rupee has been under pressure due to rising US bond yields, inflation and high crude oil prices,” said Sajal Gupta Head Fx & Rates Edelweiss.

“These circumstances are going to be tough for the Indian rupee to appreciate. Expect rupee to trade between 75.50 and 76.25 in the next week.” Last week, the rupee closed at 75.90 to a greenback.

“Next week is a relatively shorter week but market participants will be keeping an eye on the inflation and industrial production number to gauge a view for the currency,” said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.

“Expectation is that inflation could remain elevated following the recent rise in energy and food prices. On the other hand, industrial production could grow at a slower pace in January and could further weigh on the currency.” The Central Statistics Office (CSO) is slated to release the macro-economic data points of Index of Industrial Production (IIP), Consumer Price Index (CPI) on March 12.

On the other hand, expectations of India Inc’s healthy Q4FY22 results season should attract fresh equity focused foreign funds which might cub any sharp weakness in the Indian rupee versus the US dollar.

“Dollar index have surged past week and it is now trading near crucial psychological mark of 100,” said Devarsh Vakil, Deputy Head of Retail Research, HDFC Securities.

“Rupee is likely to consolidate next week on back of improving sentiments for equity markets. In near term, spot USD INR expected to trade in the range of 76.20 to 75.70. with bias towards appreciation.”

Separately,India Inc’s Q4FY22 quarterly results season as well as macro-economic inflation and industrial production data points will steer domestic equity market’s movements, next week.

Besides, price movements of crude oil along with those of other major commodities will influence the investors’ sentiments.

“The Q4 results season will start from Monday and the market’s focus will shift to individual stocks,” said Deepak Jasani, Head of Retail Research, HDFC Securities.

“The RBI has turned mildly hawkish and this could impact the valuations in the markets over time.”

Furthermore, Jasani expects that Nifty could now take support from 17,522-17,560 band and face resistance from 17,900-17,921 band over the next few days.

According to Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services, overall, equity markets have shown strong resilience despite headwinds from uncertain global environment and persistent inflation.

“Q4 FY22 earning season will kick off from next week and will be the key factor for market direction going forward.”



Cement prices: Cement prices are expected to be further raised on the back of high demand as well as rising raw material cost, said Motilal Oswal Financial Services (MOFSL).

In March 2022, cement prices rose 2-3 per cent on a month-on-month (MoM) basis across regions despite some volume push, to meet the year-end targets.

“We believe that exit cement prices in 4QFY22 were 3 per cent higher than the average realisation for the quarter,” MOFSL said.

“Our interaction with dealers suggests that non-trade cement prices in March 2022 rose by Rs 15-20 per bag in south and central, whereas the price increase was Rs 5-10 per bag in north, east, and west India.”

As per the MOFSL, cement companies are planning further price hikes to mitigate the impact of rising raw material costs.

“The impact of the rise in coal and petcoke prices will reflect in energy costs from April 2022. There has been an increase in diesel prices in the last few days, which will lead to higher freight costs.

“Companies have indicated a cumulative price increase of Rs 40-50 per bag across regions in April 2022.”

Besides, it said that dealers have indicated that cement demand improved in most markets in March 2022 after remaining sluggish in January-February 2022.

“We believe that pan-India cement volumes were 3-5 per cent YoY higher in March 2022 after a decline of 6 per cent YoY during January-February 2022.

“Few dealers believe that the expectations of cement price hikes in April 2022 led to a strong increase in dispatches at the end of March ‘22 and actual demand trends will be known by mid-April ‘22. However, most dealers believe that secondary sales too were strong in March 2022.”