GregTheAnalyst
Independent Investor, Macro/Micro & Technical Analysis
Indian equities look finished as the rupee breaks down. Charts of Indian equities, 10-year bond yields and USD/INR have now all confirmed the bearish call, after USD/INR's breakout, flagged earlier as the signal for India's peak. USD/INR is approaching 100 and should break it easily, while the central bank is about $200B short dollars. x.com
Indian equities are going bust as the rupee breaks and USD/INR starts going parabolic. The crisis reached India before the Iran war while everyone was asleep at the wheel; per @sidhant, PM Modi now urges citizens to cut fuel use, avoid foreign tourism and non-essential gold buying, and return to work from home amid the global energy crisis. Targets based on the currency break, 26,300 on the Nifty 50 and $59.50 on INDA, have almost been hit. x.com
Extremely poor global sentiment and a government warning to keep cash aside for the next two to three years cloud Indian equities' recovery. It is unclear whether the market will even make a comeback anytime soon. x.com
Indian stocks are correcting because valuations ran too high, even though the economy is still growing around 7%. Rising oil prices and a weaker rupee are the main sources of pressure, with heavy foreign selling and sharp falls in small and mid caps wiping out ₹20 lakh crore of market value in just 28 trading sessions. x.com
Indian equities look like a near-term short given dire unemployment and political turmoil in India. x.com
The US dollar is likely to hit a record against the Indian rupee, at about 100 rupees per dollar, as the oil crisis continues. x.com
Emerging markets look good for a short-term long because the US dollar is unlikely to break out without a catalyst. In-line PCE pulled down 2-year and 10-year Treasury yields, and the dollar index sits at a major resistance level, the May 2025 high. USDJPY is at 162, a critical level for the Bank of Japan to defend, and currencies move much more slowly than bonds. x.com
Gold has become cheap enough for Indian buyers after the rupee's collapse that it rebounds hard as soon as it meets real buying. Per @mining, citing Reuters, India's gold discount fell 67% in a week, from $43 an ounce to $14, as buyers returned at a two-month low, and a Mumbai dealer said it could flip to a premium. The rupee has lost 23% against the dollar in five years, and the Dussehra and early-November Diwali festivals are approaching. x.com
The dollar looks set to sell off into CPI, with Treasury Secretary Bessent likely to step in again on a cool or in-line print. @Barchart notes the dollar has already wiped out the July 31 Treasury intervention. Follow-through intervention, selling into a weak tape, is well documented back to the 1998 Asian currency crisis, and with it hovering close enough to 160, further intervention makes sense. x.com x.com
Currency interventions are only a band-aid for the Japanese yen's decline. Treasury Secretary Bessent and the Bank of Japan spent $90B to halt the slide when USDJPY hit 164, and the move has already recovered nearly half. x.com
The US dollar looks set for a multi-year bear cycle because a multipolar world needs fewer dollars. Reserve managers are diversifying, trade settles in more currencies and central banks accumulate gold instead. Against an equally weighted basket, the dollar's half-century sequence of lower secular highs is topping again on its 7-to-10-year cycle. Every major commodity bull of the past century ran alongside a falling dollar, which could also bring a second inflation wave. x.com
The dollar cycle has likely peaked because the Fed's next move is going to be a cut. Supply-shock demand destruction is doing the Fed's job and a strong dollar is doing the rest, so rates should fall, the dollar weaken, and duration assets, commodities and emerging markets reprice. A soon-ish end to the war should work against this view, but even if it drags on much longer, the rates curve has priced it in through the end of 2026. x.com
