USDINR . . . readying to take off!!!!

In one of my earlier posts I have mentioned about the inverse correlation between the USDINR and the Indian stock markets. In fact the correlation co-effecient is near (-)85% which is a high inverse relation.

while the Nifty movement seems to be 'confusing' I thought let me get some idea from the USDINR.



The above chart indicates that the USDINR is currently in 'bullish mode' - MACD too is suggesting it. Moreover it has made a higher low formation and I expect that a break and close above Rs 49.10 should trigger the anticipated rally in the dollar.

This will be more so considering that our FM is willing to increase imports of foodgrains (because of drought) and at the same time ban export of food grain. Logically this should lead to a depreciation in the rupee. A break above Rs 49.10 will tell us that such a thing will happen!!

Price is the king - remember?

Happy trading !!!

CA Rajiv D Khatlawala
Head of Research & Training
JHAVERI Securities Ltd.