Is Indian economy about to be hit by Murphy Law?
When things have to go bad, they go bad at the worst possible time
Crude Oil prices have bounced pretty sharply in the last couple of days...
With this bounce - Brent Crude is knocking at a very significant resistance level on the weekly chart
Remember the chart does not capture today's movement. Brent Crude is at 53.7 and if it does not pullback on Friday - it would qualify as a fresh breakout. That would mean - more Bullish price action in Crude prices - the last thing Indian economy would like to see
India imports most of the crude from overseas market and if INR depreciates - it would mean higher cost of imports = imported Inflation.
Here's USDINR weekly chart - Again on verge of breakout
If for any reason - USDINR moves past 68.85, then there will be short term dramatic depreciation to 73-75 and that might add more panic. WEAK INR AND HIGHER CRUDE PRICES
Will the Macroeconomic Benefit disappear?
India has benefited enormously from lower crude prices and stable INR. But if Crude prices breakout along with INR depreciation, there will be new challenge for policy makers...the last thing India needs during this chaotic period
Now remember nothing has happened - Brent Crude has not broken out decisively and USDINR also remains well below the resistance line of 68.85. There is nothing to panic NOW. All I am saying - what to keep an eye on. Any breakout in the above two asset will be very bad for Indian economy
Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers