Rupee Range bound?

The Indian markets are a lot dependent on the foreign institutional investors for trends. Investors who are not so technically proficient watch for moves of FIIs and follow the latter on a bandwagon effect.

So this week, with the NYSE down, Europe down, China slow and with the IMF - World Bank predictions at low levels, why should the FIIs sell their Indian assets? Growth data for industrial output was lower than anticipated in August; July output too was lower by 0.1 percentage point . Yet India was consistent in growth for a fifth straight month. So the third largest Asian economy has been a performer.

FIIs will also wait to hear the estimates of losses in the cyclone that hit India's eastern states. Laggardly that bureaucracy is, it would be a difficult estimate to make in the immediate short term. Losses imply restoration/ revival investment which may be a Keynesian antidote to a resilient economy and India should be able to absorb the impact.

The fall in oil prices is benign for India.

So Indian Rupee may not see a dump from FIIs as they have nowhere else to go but gold. There might be some exit, but  a few other investors may hold on for lack of alternatives and waiting for the markets to be in full swing on Tuesday before making big moves.  Result could be a ranged movement with possibility  of some appreciation

jaynayar@gmail.com