INSUBCONTINENT EXCLUSIVE:
The more pronounced the fall, the steeper the subsequent rise: That seems to aptly describe the movement of the rupee against the dollar.
In
the past 15 years, as Indian assets increasingly began featuring in the shopping carts of overseas investors, the local monetary unit has
seen average appreciation of about 13 per cent in seven months on each occasion it had lost 15 per cent or more
Neeraj Agarwal, vice-president at IDFC Securities, said that given the recent depreciation, the rupee could even climb back to 67-68 against
the dollar in the near-term.
This year, the rupee depreciated nearly 18 per cent to a record low of 74.5
But in the last one month, it appreciated around 3.8 per cent
according to Bloomberg.
Historically, the rupee appreciated at least 10 per cent from the lows
Thus, the probability of the currency edging up to 67 is relatively high.
Technically, too, the rupee has recently broken the 50-day moving
average level, which acted as a stiff resistance, and the next target is the 200-day moving average of 68.3.
In the past 15 years, there are
four instances of the rupee plunging more than 15 per cent, and the average span of depreciation lasted seven months in which the currency
lost 17.8 per cent-33.1 per cent.
The recent appreciation implies that the current momentum in the equity market could sustain in the
That means that the Nifty typically falls when the rupee depreciates.
Correlation reading shows the relationship between the returns on two
A positive reading means two securities move in tandem and vice-versa.
So, what would drive the Nifty higher Companies with rupeedenominated
revenues stand to gain more
This means banks, capital goods, consumer discretionary and staples will outperform in the near-term
In the past four instances when the rupee appreciated more than 10 per cent, the Nifty posted positive returns of 11 per cent in an average
