Breakdown in Indian Rupee

Nifty and the Rupee have been positively correlated in the past. A strong Rupee is good for the markets and a weak Rupee has seen the markets fall. In a research report by Religare Capital Markets it was shown that between 1990 and 2012, 69% of the time the quarterly movement of Sensex mimicked the movement of Indian rupee.

See the chart of USD INR. USD has broken down (Rupee strengthening) and broken key supports. This is positive news for the Equity markets. Also notice the periods in 2018 and 2020 when there was marked weakening of the Rupee which was in parallel to a fall in Equities.

So keep a watch on the INR. A continued downtrend in the USDINR should spell positive news for Equities.

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