Market Update: USD/INR, Commodities, and Equities Outlook 19th May 2025

USD/INR: Bullish Momentum Expected

In the past week, USD/INR exhibited a solid upward movement, closing with a +1.02% gain. The pair opened at 84.65, touched a high of 85.74, a low of 84.64, and ultimately closed at 85.52. This suggests that USD/INR has formed a firm base from which further upside potential may emerge.

• Outlook: FXMethods expects USD/INR to maintain a gradual upward trajectory in the coming sessions. The range for USD/INR is forecasted to be between 85.20 and 85.78, with potential resistance at 86.10.

  
  

The recent downgrade of the U.S. credit rating by Moody’s over the weekend—citing concerns over the U.S.'s stretched government debt and lack of clear fiscal reforms—could add some volatility in the near term. However, despite this, the USD is expected to retain strength against the INR due to other broader macroeconomic factors.

Indian Equity Market: Upward Momentum Continues

The Indian equity market continues its bullish trend, supported by Foreign Institutional Investor (FII) inflows, and backed by steady participation from Domestic Institutional Investors (DII). The market sentiment remains positive, bolstered by the global trend of central banks lowering interest rates, which provides a supportive backdrop for risk assets like equities.

• Outlook: With global liquidity still favorable and the Indian market continuing to attract inflows, the upward trend is likely to persist in the short term. Investors should, however, remain cautious of potential volatility arising from broader global economic shifts or fiscal concerns related to major economies.

Commodities: Energy in Bearish Territory, Metals Mixed

1.    Energy Futures:

• Brent Oil, WTI Crude, London Gas Oil, and Natural Gas remain in strong sell mode. The energy sector is undergoing a corrective phase, with a negative weekly trend. This is likely driven by concerns about global demand, geopolitical factors, and market corrections after significant price gains in the earlier part of the year.

Outlook: Energy prices may continue to face downward pressure, particularly if demand concerns persist or economic data points to slower growth. Traders should closely monitor any developments that could impact supply and demand dynamics.

2.    Metal Futures:

• The outlook for metals remains mixed. On one side, Aluminium and Zinc are in strong sell mode, indicating weaker demand or overbought conditions. On the other hand, Copper, Platinum, and Tin are seeing strong buy signals, driven by positive industrial demand and the ongoing green energy transition.

• Outlook: While base metals like Aluminium and Zinc are facing headwinds, industrial and precious metals such as Copper and Platinum could benefit from structural growth in sectors like electric vehicles (EVs) and renewable energy.

3.   Grain Futures:

• Grain futures are under pressure, with London Wheat, Oats, Rough Rice, US Corn, Soybeans, and US Wheat all in strong sell mode. The sell-off in grains reflects both favorable growing conditions and stable supply levels across major producing regions.

  
  

  • Outlook: Grain prices are expected to remain on the downside as supply conditions stay favorable. Traders should be cautious in taking long positions, as the market sentiment continues to point toward further bearishness in the near term.

Key Takeaways:

• USD/INR: Expect gradual upward movement, with short-term resistance at 86.10.

• Indian Equities: The market remains on an upward trend, supported by FII inflows and global rate cuts.

• Commodities:

  • Energy: Brent Oil, WTI Crude, and Natural Gas are in a strong sell mode, indicating further downside potential.

  • Metals: Mixed outlook with Copper, Platinum, and Tin showing strength, while Aluminium and Zinc are in sell mode.

  • Grains: Bearish sentiment prevails, with strong sell signals across major grain commodities.

Final Thoughts:

As global macroeconomic factors continue to evolve, market participants should stay vigilant. The USD/INR’s steady uptrend may continue, but external factors like the U.S. credit downgrade could introduce short-term volatility. Meanwhile, the energy sector is facing a correction, while the metals market shows promising signs for certain commodities. In grains, the bearish trend appears set to continue.

We will continue to monitor these developments closely and update you on any significant changes in market dynamics.

Stay tuned for next update, and happy trading!