Rupee Weakness Widens India’s Fiscal Deficit, Nifty Likely To Test 11500 Next Week


weakness of the INR. India is a major importer of crude oil and is adversely impacted by the weakness of the Rupee or the rise in crude oil prices. 

Fiscal Deficit Gap widens
In its budget session, for the financial year 2018-19, the finance ministry had set a fiscal deficit target of 3.3% of the GDP for the full year. However, the current fiscal deficit figures have surpassed the government's target by a screaming 190% margin. Currently, the fiscal deficit figures stand at 9.6% of the GDP. 

RBI Fails To Harness The Rupee
The RBI’s pre-emptive move to hike the lending rates on August 1st did little to ease the massive rout of the Rupee. The INR weakened further on Friday and made a low of 71.415. Although India’s lending rates are standing at 6.50% after the recent hike by the RBI, the fiscal deficit numbers are hovering around 87% of the 2018-19 budget estimates.

Market Outlook
The Nifty Closed below its 5 DEMA high (11680 approx) on Friday. The benchmark index faced stiff resistance around the day’s high 11727 approx. On Friday, markets opened around the 200 DMA (11675 approx) however the market failed to sustain the momentum. In the coming week, Nifty might witness selling pressure if foreign investors leave the country's equity markets due to uncertainties arising from the government's inability to control the excessive weakness of the Rupee. 
On Monday if Nifty breaks and trades below the 10 DMA (11610 approx), it is likely to see a downside till the20 DMA (11495 approx).
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India’s fiscal deficit numbers are standing at a whopping Rs. 5.4 trillion, due to the excessive weakness of the INR. India is a major importer of crude oil and is adversely impacted by the weakness of the Rupee or the rise in crude oil prices. 

Fiscal Deficit Gap widens
In its budget session, for the financial year 2018-19, the finance ministry had set a fiscal deficit target of 3.3% of the GDP for the full year. However, the current fiscal deficit figures have surpassed the government's target by a screaming 190% margin. Currently, the fiscal deficit figures stand at 9.6% of the GDP. 

RBI Fails To Harness The Rupee
The RBI’s pre-emptive move to hike the lending rates on August 1st did little to ease the massive rout of the Rupee. The INR weakened further on Friday and made a low of 71.415. Although India’s lending rates are standing at 6.50% after the recent hike by the RBI, the fiscal deficit numbers are hovering around 87% of the 2018-19 budget estimates.

Market Outlook
The Nifty Closed below its 5 DEMA high (11680 approx) on Friday. The benchmark index faced stiff resistance around the day’s high 11727 approx. On Friday, markets opened around the 200 DMA (11675 approx) however the market failed to sustain the momentum. In the coming week, Nifty might witness selling pressure if foreign investors leave the country's equity markets due to uncertainties arising from the government's inability to control the excessive weakness of the Rupee. 
On Monday if Nifty breaks and trades below the 10 DMA (11610 approx), it is likely to see a downside till the20 DMA (11495 approx).
 
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