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  • Jul 5, 2022 - Can a Depreciating Rupee Trigger the Recovery in Indian IT Stocks?

Can a Depreciating Rupee Trigger the Recovery in Indian IT Stocks?

Jul 5, 2022

The domestic currency Rupee has been depreciating against the US Dollar and is trading at all-time low level of 79.13.

I did a video last week on the rupee and shared my technical view.

How much more will the rupee fall against the dollar?

With the help of two charts, I answered this question. In case you haven't watched the video, I recommend you do so at the earliest.

The rupee is likely to hit 80 sooner which will be beneficial for the Indian IT sector.

The IT sector has swift impact of rupee momentum against the US dollar.

Will history repeat?

Historically, the USDINR and IT index stocks go hand-in-hand, though sometimes there are divergence considering the equity market scenario but the long-term relationship stays together.

An abrupt bullish momentum in USDINR triggers an uptick in IT index which was witnessed in 2009 & 2012.

The IT index is down by 28% in H12022 while a depreciating rupee may trigger a recovery in the IT index.

On weekly chart of IT index, the bullish harami candlestick pattern is visible in mid-June indicating the sign of reversal.

US$ INR & Nifty IT Index

 

A depreciating rupee may ignite the reversal for IT index.

At present, the rupee is trading at 79.06 against the US dollar.

While the Nifty IT index is trading up by 0.9% at 28,130 levels. From the index, Infosys and Coforge are the top gainers today.

I'll share more on his trend on my Telegram group. If you're interested in being part of my charting journey as I share how to create wealth from profitable trade setups, join my telegram channel - Fast Profits Daily.

Meanwhile, do check out which five stocks stand to gain big from a weakening rupee.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...

Brijesh Bhatia

Brijesh Bhatia Research Analyst and expert chartist, is the editor of Alpha Wave Profits. Fully committed to his craft, Brijesh has mastered the art of making money by trading using technical analysis. Brijesh has an MBA from ICFAI and 16 years of experience in India's financial markets. He began his career on Dalal Street as commodities dealer and it wasn't long before he developed his own unique trading system. Brijesh worked on his trading system until it could be expected to deliver 5 units of return for every unit of risk.

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