Rupee strength - Long term channel breakdown
Why this is important?
A lot of India's top companies have export as a major component of their earnings . As the rupee keeps getting stronger they become less competitive in export markets. A strong rupee hits the earnings of some of our high weightage stocks.
Why is the rupee becoming stronger?
It isn't as much about the rupee becoming stronger but the $ becoming weaker because they keep printing more money for stimulus.
Stocks to watch for?
Benefits companies which rely heavily on imports coz input costs will reduce (Eg: Cement co's will have a reduced cost of imported coal which is a major input cost for them). Hurts export oriented co's like IT and Pharma . Metals will benefit.
Is there a trade here?
Yes and No. No because RBI usually guards the rupee to make sure it doesnt become too strong. Yes if you will feel daredevil enough then short below 73.25. SL 73. 40 .
Technically?
Stock has broken a long term channel. If it continues to break the rupee could get much much stronger. (subject to RBI not intervening and allowing for a free market)
A lot of India's top companies have export as a major component of their earnings . As the rupee keeps getting stronger they become less competitive in export markets. A strong rupee hits the earnings of some of our high weightage stocks.
Why is the rupee becoming stronger?
It isn't as much about the rupee becoming stronger but the $ becoming weaker because they keep printing more money for stimulus.
Stocks to watch for?
Benefits companies which rely heavily on imports coz input costs will reduce (Eg: Cement co's will have a reduced cost of imported coal which is a major input cost for them). Hurts export oriented co's like IT and Pharma . Metals will benefit.
Is there a trade here?
Yes and No. No because RBI usually guards the rupee to make sure it doesnt become too strong. Yes if you will feel daredevil enough then short below 73.25. SL 73. 40 .
Technically?
Stock has broken a long term channel. If it continues to break the rupee could get much much stronger. (subject to RBI not intervening and allowing for a free market)
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