INR under stress owing to Tax regime and data releasing season in US and Europe

Those who have missed out our last article on rupee's dips are now tempted to get benefited from USD/INR trade ideas by this time. Indian rupee is likely to struggle with disappointing corporate earnings and the threat of tax policy makers. Yes as per our recent post, rupee has been declining massively over the couple of trading sessions which is resulted by MAT issues. Finance ministry had earlier last week announced the levy Minimum Alternate Tax (MAT) on foreign funds. The government has now clarified that the IT department has posted 68 case notices to FIIs (foreign institutional investors) for payment of dues totaling Rs 608 crore towards Minimum Alternate Tax (MAT).

Also on the other hand, markets may turn volatile ahead of the US Federal Reserve monetary policy meeting and expiry week of local futures and option (F&O) positions. Market participants feel tax notices to FIIs may hurt investment sentiment adversely. "Investors are worried as tax notices to FIIs may lead to much litigation, which may be long drawn affair, and may lead to lot of uncertainties. And in addition, significant data releasing of composite PMI, consumer confidence index, GDP annualized numbers qoq for the US, GDP qoq & yoy for UK, Germany's and Euro zone's unemployment data are all series of hot news lined up in this April.

A stronger rupee trims down exporters' profits that are earned abroad and converted back into the Indian currency. But the export-oriented IT, energy, and metals and mining sectors are forecasted to be three of India's four worst-performing sectors in earnings growth over the next 12 months.

Although we get to see some smooth corrections on daily chart as a result of profit bookings in early trading sessions, we could still see a further decline in INR in the days to come on intraday and weekly chats. Hence, Long on futures can fetch the traders a decent some of money.