Rupee: Downside Risks In Play, For Now

The rupee faces four-month trendline support at INR48.70/US$, a break of which could take it back towards INR50.00/US$. The stock market rally following general elections in April-May is faltering, and a drop in the Sensex below four-month trendline support at 14,300 could serve as the trigger for further rupee weakness. Global risk appetite will remain a key factor for the rupee, as it will determine the volume of capital inflows. Should risk appetite improve, major resistance for the rupee exists at INR46.50/US$.

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