BRIC currency crisis bad for Indian Banking Stocks?

Weakness in the Indian Rupee will most often translate into weakness for the Indian banking space as potential hawkishness forced on the RBI in defense of the Rupee could hurt bank profits. The Rupee has weakened considerably since Russia raised interest rates to defend the slumping Ruble and more recently with China devaluing the Yuan.

USD/INR (INR=X)

Recent  topping action in the bank index could suggest a possible sell off in this space in anticipation of further Rupee weakness and potential hawkishness from the RBI. Just going back to August 2013 banks corrected over 30% when the Rupee fell to over 68 Rupees to the dollar and the RBI embarked on some serious tightening raising the overnight lending rate from 7% to 9%.

BANK NIFTY (^NSEBANK)

 

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About rajveeronmarkets

I am an avid market watcher having followed capital markets in the US and India since 1993. My research interests includes areas of Capital Markets, Banking, Investment Analysis and Portfolio Management and have over 20 years of experience in the above areas covering the US and Indian Markets.
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