Inside Story of Dollar Appreciation, BSE Sensex And Parliament Election

Monday, 28 May 2018

Inside Story of Dollar Appreciation, BSE Sensex And Parliament Election

Greetings from Hitesh! Many of you have requested to write about sudden US Dollar appreciation against rupee. I have done my research for the last 20 years data and below given is my findings.

For the beginners, let us see what happens when exchange rates changes……

Eg. Is 1 US Dollar is exchanged at Rs.66 then you get Rs.66. Now it is exchanged at Rs.68…..It means you are getting Rs.2 per dollar extra without doing anything. In other words, those who have dollar and want to covert into Indian Rupee…they get 3% extra purchasing power (2/66*100). They can buy more in India with the same amount of dollar.

Conversely, those who want USD will have to pay 3% extra. In other words, if FII is selling shares in India and wants to buy USD, it will get 3% lesser return in USD.

Hope you are clear with this basic.

Who Have USD?

NRIs / Exporters / FIIs / Corporate Investors and those who had converted rupee into USD illegally in the past and now they have USD and they want to convert into rupee again.

Is it a coincidence in last 20 years?

Just read all the periods……

Year 1999 to Year 2004:-

When Sensex made a top of 6170 something first time in February 2000, the USD rate was Rs.43.63. The same went to Rs.47 by Nov.,2000 and remained at an average of Rs.48 in 2001, Rs.49 in 2002.By the time of December 2003 it came down to 45 again !!

What happened to Indian Market during this time?

Before mkt hit all time high in 2000, USD was 41 in 1998. Then USD moved up and market also. It means while market was moving up somebody was selling and covering RUPEE into USD.

BSE sensex went from 6170 to 2400 in a span of 18 months. In other words…..the situations were most favorable for those who were converting USD to Rupee…they were getting Rs.6 extra (Rs.49 instead of Rs.43) and they can buy Indian shares at 60% discount as Index was down from 6100 to 2400 !!

Conclusion:-“Before election somebody sold heavily and was buying when everybody was selling post election.”

Year 2004 to Year 2007:-

During 2004 USD remained steady around Rs.45.25. During 2005 USD remained steady around Rs.44. During 2006 USD remained steady around Rs.45. During 2007 USD dropped from Rs.44 in Jan 2007 to 39 by December 2007.

What Happened to Indian Market During This Time?

We saw Sensex going up from 4000 in 2004 to 20000 by Dec.,2007. Somebody who bought more during 2004-2006, sold heavily from March 2007 to Dec.,2007 and converted their rupee into USD. Again before election they sold !!

Conclusion:- They sold while others were busy buying shares and made money in shares market and also in exchange rates.

Year 2008 to 2009:-

Surprisingly, USD rate moved from Rs.40 in January 2008 to Rs.50 in March 2009. In other words while market was going down…….those who bought around September 2008 were selling in 2009.

They got Sensex sold at an average of Rs.17000 in 2007 and bought back around Rs.9000 in 2008 itself and also they got 25% higher Indian rupee against their USD.(USD moved from Rs.40 To Rs.50 as mentioned above).

Conclusion:- “Somebody was buying when everybody was selling during this period.”

Year 2009 to 2014:-

USD came down from 51 in Feb., 2009 to 46 by Dec.,2009. By 2010 it came down to 44. In 2011, it went up to 53 by Dec. It means those who bought in 2008/2009 sold in 2011!! Selling continued in 2012 and USD made 55. In 2013, USD made 65!! What a selling. They bought at 46/- and sold most at 65 before 2014 election!! In May 2014, it made 59/- so, buying started and if you recall, there was a major sell off in August/Sep.,2014. USD had made 62 in that months!!

Conclusion:- Panic will be created so that normal investors loses his last shirt and some body will start buying your shares.

YEAR 2014 to 2018:-

We are approaching election again in 2019. The game is the same. Just see the data. USD remained in the range of 63 – 66 in 2015.  It was steady around 66/67 in 2016. But in 2017, it came to 63. It means market moved up and somebody bought shares. From 63 in January 2018, it has moved to 68 in May.,2018. It means somebody is selling and it can be seen from MIDCAPS and SMALL CAP indexes.

Three Major TREND from the last 20 years DATA :-

Before Election there is a selling in the market and USD going up and market going down.

After election there is buying in the market and USD going down and market moving up.

USD has always moved up before election. 1998 – 41/- to 45/- in 2013. 2004 to 2009 – 45 to 50. 2009 to 2014 – 50 to 65. (This was CONGRESS LED period and 30% depreciation – how much money would have gone OUT? We had Commonwealth scam, 2g and 3g scams in this period only). 2014 to 2018 – 63 to 68. It means steady compared to last government.

Does this mean that congress knew before hand that they will not come to the power in next elections? They did 30% depreciations and took all the money out before 2014?? They are smart guys.

What it means for NORMAL GUYS?

There are smart ways of making money and smarter you get, faster you will make money. The simplest way of making fast money is not working hard or finding new TIPs or following some STAR INVESTOR. The simplest way of making fast money is to follow what my mentor ANTHONY ROBBINS calls is – CANi – Continuous And Never Ending Improvement in your skill sets and educations.

At destiny management we are investing our time in educating our investors properly and keeping them upto date with the latest strategies which FIIs or SMART investors are following. If you want to take advantage of the same, be with us and see the magic in your life.

Have a great week ahead.

Follow me on Twitter @hiteshmparikh or on Whatsapp - +91-9869425399.

Live With Passion…Invest With Passion.

Hitesh Parikh.