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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