Is USDINR is indirectly propositional to NIFTy50 ?
It means increase in USDINR will result in decrease in NIFTY value ?
To my understanding nifty 50 will more inversely dependent on underlying usd value rather than usdinr futures value . So if the usd value increase it means our rupee is depreciating for that it will obviously have a negative impact on Indian stocks. it’s only logical.
USDINR value depends mainly on the flow of USDollar in & out of the India. Who creates the majority of tht flow in India? It is FII/FPIs. So, USDINR value is inversely proportional to FPI inflows.
One might argue FPI inflows itself drives the NIFTY50. Yes, it used to happen before 2014 elections. But, after tht the domestic players started impacting it majorly. You might hv observed recently in Jan-Feb, NIFTY50 bounced back, but USDINR was flat. USDINR fell only frm Mar as FPI inflows started significantly.
Now coming onto USDINR future, it is a speculative product. It runs in tandem with USDINR value & in addition, also based on future expectations of FPI inflows.
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