Rupee Reflects in Indian Stock Market, What will be the next if it crosses 70??
Indian Rupee value decreasing day by day and the record high of 18 years and touching its low value of 69.22 on 28/08/2013 Wednesday. Weak current account deficit is the main reason for decreasing. In addition to the Lok Sabha approves the Rs1.35lakh crore Food Security bill on Tuesday after the word the fiscal deficit becomes worsening than ever. INR decreases 82paise on that day and touches upto 67.06. INR continues its free fall from the opening level before recovering on intervention by the Reserve Bank of India. Public Sector Banks sold dollars and gold stock which they hold as stock and it is the big reason to decrease in Gold price in India alone. But globally Gold future increasing day by day.
Another reason for this free fall is the action being taken by US against Syria and the war is being muted due to several global political reasons. But it may breaks at any time, if US announces war declare again Syria, Indian Stock market may see further heat and INR can also decrease upto 72 as its first to touch above 70.
The currency has fallen 7% this week and 15% since July 15,2013, when the RBI announces liquidity tightening measures to cut the volatility in Indian Rupee. Indian Stock Market further may decrease upto 4800 within this year end. Investors still can wait to Invest. Think before you invest as all the stock prices are seems to be very cheap. Wait and think before choosing the sector, mostly avoid PSU banks for short term 1-2months as more confusion against Government policies may further drag the stock prices to get cheap. But if recovery starts market may regain old confidence when FII start investing and it takes nearly after this year.
It an another 2008 after the Satyam scam as prices get slashed and still to wait to catch the bottom level. If the same pressure continues to INR it may decrease upto 72-75 in short term. This pressure is not only for Indian Rupee, its the same for Indonesian rupiah, Philippine peso, Malaysian ringgit , but most affected is INR.