Well no time is the wrong time to trade and when it comes to stocks that have already made the rally; one should start looking at making shorts. Unlike earlier times when a rally in the stock markets had a reverse impact in the forex trades, the dollar is actually making contrasting and interesting moves.
With every rise in the nifty or sensex, the dollar index is actually moving up. The negative rally hasn’t been observed either in the commodities market or in oil.
If one wants to look at it from the other way, a rise in the dollar should cause metals to fall, and such should be the case in the near future. The crude oil segment is also not expected to rise further from the current levels of USD 90-100 per barrel.
What also creates confusion to the trader is the weakening rupee. It has been normally observed that rising markets also strengthens the domestic currency.
The markets have very recently been very volatile and registered movements more than 400 points on the either side. A 9-10% movement of the index has the potential to make significant impacts on the rupee movements. We have also seen that there has been no dearth of FII investments in the country as well. Despite all these the rupee sees no rise and the situation is quite alarming.
‘Bell the bull’ says that the dollar getting more expensive and the rupee weakening holds no great future for the metal stocks because all asset classes then have a threat of collapse. Even seemingly safer options of gold and silver might loose their hold given the scenario continues.