Kunal Bothra
Market Expert, ET NOWKunal Bothra has over 10 years of experience in financial markets. With expertise in understanding markets, and competency in technical, behavioural, and statistical analysis, Bothra is one of India's finest technical analysts. Known to be an excellent stock picker, he was earlier with the Edelweiss Group and LKP Securities.
Rupee chart repeating history! If it’s true, unit headed for sub-58 level
In my earlier article ‘Contrarian on IT’, I mentioned how from a short-term view, the most ‘sold’ IT stocks and sector could form a short-term bottom.
Look at the recovery in the IT stocks post that, be it Infosys, TCS, Tech Mahindra or Wipro!
However, while we look at individual stocks and charts and assess the situation, there is one major overhang playing its part right now, which can impact not just the IT sector but the larger economy as well.
It is about USD-INR.
The rupee is going through a steady phase of appreciation since last few months. It’s more gradual in nature, and interestingly it is already at a 21-month high.
On indicator front, this currency rhyming a historical reference point, and if it plays out, it could offer interesting insights to not just a forex trader, but everyone who gets affected by large rupee moves on a 12-18 month time scale.
Here’s the chart:
Key takeaways from the historical comparisons
In the last 20 years, there were two instances on the weekly charts previously.
Have a look at the table below:
This indicates that if history rhymes, and the key indicator, price trends etc re-occur, then an average 10 per cent appreciation could strengthen the rupee to sub-58 levels, at the least, in next 12-18 months.
The key is that weekly Stochastic' should remain in such oversold territories.
Let’s wait and watch to see whether: “HISTORY CAN SOLVE THIS MYSTERY !!”
Look at the recovery in the IT stocks post that, be it Infosys, TCS, Tech Mahindra or Wipro!
However, while we look at individual stocks and charts and assess the situation, there is one major overhang playing its part right now, which can impact not just the IT sector but the larger economy as well.
It is about USD-INR.
The rupee is going through a steady phase of appreciation since last few months. It’s more gradual in nature, and interestingly it is already at a 21-month high.
On indicator front, this currency rhyming a historical reference point, and if it plays out, it could offer interesting insights to not just a forex trader, but everyone who gets affected by large rupee moves on a 12-18 month time scale.
Here’s the chart:
Key takeaways from the historical comparisons
In the last 20 years, there were two instances on the weekly charts previously.
Have a look at the table below:
This indicates that if history rhymes, and the key indicator, price trends etc re-occur, then an average 10 per cent appreciation could strengthen the rupee to sub-58 levels, at the least, in next 12-18 months.
The key is that weekly Stochastic' should remain in such oversold territories.
Let’s wait and watch to see whether: “HISTORY CAN SOLVE THIS MYSTERY !!”