Happy Thursdays! Expiry Volatility continues

English: The Symbol of Indian Rupee approved b...

English: The Symbol of Indian Rupee approved by the Union Cabinet on 15 July 2010. The Design for the symbol was submitted by D. Udaya Kumar. (Photo credit: Wikipedia)

One week to go, rupee made an equally violent come back even as the Euro finally matched INR levels to its own performance in Europe rather than wait for its comeback with stronger levels against  the rupee on the back of depreciation against the Dollar. Dollar marched on relentless against currencies yesterday before Chines Flash PMI data again confirmed the worst and again a rally in base metals and precious metals has been nipped in the bud because China would not be importing any more in a hurry esp after the export crunch began in APAC last month.

For equities, it means the risk trade is definitely off but the Dollar may have stopped rising giving a temporary synaptic failure between rupee depreciation and Equity crash so equities recovery can likely continue after the rupee is back at 55 levels too, not necessairily nose diving at every pick up in the USD against our currency. Changes like China’s tick down and the crash in Newzealand exports for example could disconnect the all markets correlation and that would be fortunate for most FIIs too as the Risk on trade can continue while Europe implodes on itself Spanish and Greek yields continuing rising upwards and ECB unable to afford another LTRO.

But then a lot of you should now just be trading June futures and banks and select equities like IDFC, REC in the infra sector ( or construction if you prefer)

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