The EM Crisis at Indian Shores

Published: Wed, 01/16/19

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The Emerging Market crisis, if you have read about it was all about currencies and bonds falling off a cliff. Round one we held our own till we could not. But it was a long hold out thanks to domestic liquidity. But the crisis is likely to comeback in full scale as the dollar resumes a rally pushing higher the USDINR and the domestic bond market takes not of an expanding fiscal deficit. The charts speak for themselves

USDINR

USDINR went past the wave i high this morning and iii=i goes to 71.77. 70.30 is the wave ii low.

usdinr 140119

EM Currency crisis 2.0

EM Currency Index - pulled back to the wave 4 position of the previous decline. The 5 wave decline last year was the start of a trend that is not over. After the bounce another 5 wave decline is coming. And this pullback can now be marked as complete as A-B-C and so it is time to consider the return of the EM Crisis. A third wave down will be as big if not bigger.

EMCUR

Indian 10 year bond yields

The Bond Market is breaking again as expected. Indian GSEC yields broke out of the falling channel and now wave III is pointing to 7.74% as shown. The trend was up strongly today as markets ignore the headwinds from a strong dollar and rising bond yields simultaneously. And the twitterati continue to debate why bond yields cannot rise in a low inflation environment, missing the elephant in the room, the fiscal deficit.

bonds 160119

Midcap Zapped

The Midcap indices completed a triangle pattern with a throw over today. A throw over is a false breakout that fails to hold. The Nifty Midcap 100 closed inside the triangle end of the day with a long upper shadow. A-B-C complete from the channel perspective, we are waiting for the next major move down to start. The breadth went back to marginal negative end of day today.

midcap 160119

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Rohit Srivastava
www.indiacharts.com
For accurate market forecasting. Market forecasting is a study of past data to assess
future probable outcomes. It is our endeavor to discuss high probability outcomes for
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