Friday, June 24, 2016

BREXIT Impact on Indian Market

In the previous updates itself we mentioned that whether BREXIT or not Indian markets are already looking weak with majority of indicators started aligning together for a reversal!

Avoid creating any long positions and any rallies can be utilized as selling opportunity. It is difficult to say the level from where we can see meaningful bounce back. Markets hate uncertainty and the current scenario reminds me of Lehman Brothers bankruptcy in 2008 when no one knew the impact on the Global markets and economy.

Currency war: Such sharp appreciation in INR against GBP and sharp fall in GBP against USD is an indication towards rush for finding the true value. Volatility in currency kills the margin along with demand. This will result into impacting the profitability of not only exporters but importers as well since they would have been well hedged. Demand is definitely going to go south as expansion in already bleak looking economy in UK will be on a halt until new policies are set which will take its own sweet time.

Possibility of other Exits: This does not look like an immediate possibility otherwise EURO will be dissolved creating stress and eventually war for survival instincts. But will definitely raise the possibility where if austerity measures are not met internal stress will increase on economies that are trying to take the burden of those who are lethargic.

More details about how our markets will move will be published in “The Financial Waves short term update” tomorrow and we have been prudent in mentioning over past few weeks to stay alert as internals were weakening whether BREXIT or not!!!

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