Mumbai: The rupee recovered from an early slide on Tuesday as gains in the domestic stock market raised hopes for foreign fund inflows, but broad dollar strength overseas could prevent sharp gains.
At 10am, the partially convertible rupee was at Rs48.79/80 per dollar, off a low of 49, and slightly stronger than its previous close of Rs48.84/85.
“The rupee opened weaker but then better-than-expected Infosys results have raised expectations that stocks will perform well, so the market is watching the share market for cues,” a senior dealer at a private bank said.
“The rupee most likely should hold in a band of 48.60 to 48.90 today, but if stocks tank, then 49 and beyond looks possible,” he added.
Shares opened weaker but soon turned positive after bellwether Infosys Technologies Ltd reported better than expected quarterly earnings.
Infosys, India’s No.2 software services exporter, beat expectations with a one-third rise in quarterly profit, but cut its annual forecast as a global downturn squeezes outsourcing and prices.
Foreign funds have so far sold a net $70 million worth of shares in 2009, after having dumped more than $13 billion in 2008.
One-month offshore non-deliverable forward contracts were quoting at Rs48.98/49.08, weaker than the onshore spot rate, indicating a bearish near-term outlook.
Dealers said they would be eyeing the dollar’s performance overseas for cues. The euro fell against the dollar on Tuesday, under pressure near a one-month low hit the previous day as expectations mounted that the European Central Bank will cut interest rates this week.