Stock Market and Currency Movement - Indian Perspective

On July 25, 1990 Sensex touched a milestone mark of 1000, 17.5 Rupees sufficed to buy 1 Dollar at that time, Sensex seemed to like to be a deer chased by the tiger i.e investors and Sensex touched the magical figure of 4000 just at the arrival of the spring i.e in March 1992, a whopping gain of 300% in over just 18 months, but contrary to the mass opinion that gains in stock markets lead to gains in currency as foreign investors would be lapping the listed equities at whatever price they get, the Indian currency Rupee depreciated against the Dollar and against every 28.37 Rupees 1 Dollar could be bought in March 1992, The Indian equity markets opened for the Foreign Investors in 1992 and celebrating the event the Sensex rallied from 2000 to 4000 from January 15, 1992 to March 30, 1992 i.e 100% within 2 months, your guess is my guess, you must be expecting that rush of the foreign investors pulled the markets and so Rupee might have appreciated against the Dollar, but contrary to our opinion while in January 1992 25.86 Rs fetched 1 Dollar, the rush of the foreign investors could not the stop the rupee from depreciating and 28.37 Rupees by an Indian Importer could purchase goods worth 1 Dollar, i.e while foreign investors were lapping Indian Equities they were hedging there positions by going short the Rupee and buying Dollars, or there were many other traders who were shorting the rupee and going long the dollar.

Targets for short selling

After a strong downfall from 2618 to 2144 HDFC has given a correction (this is a correction till it doesn’t trade beyond 2450 – 2460) and traded up to 2430, now HDFC might resume the downfall, so as of today one can go short for a target of 2300, HDFC is currently trading close to 2380 one can keep a stoploss close to 2398 next 2406 and lastly at 2415 and go short on HDFC for a target of 2300 intraday. Also if by any chance HDFC trades above our stoploss wait for HDFC to move past 2430 and then short HDFC Future with a stoploss of 2460 (cash) and 2500 for a minimum target of 1800 in coming 2-3 months.

Hero Honda to seems to be topped out and could be a target for short building the first minimum target on it seems to be close to 1200 which could be achieved within 1-3 months, the next target on it seems to be close to 900 which could be achieved within 5-6 months possibly by year end stoploss for all this positions is a trade by Hero Honda above firstly 1520 and next 1626

Bharti Airtel to seems to be in a phase of distribution and could be a target of shorts with a stoploss close to 800 and 850 for a target of 500 in next 4 months