Rupee volatile before the counting of votes tomorrow

One should wait for the actual election result to be declared and then take short term positions. Please do not take positions on the basis of initial leads in the media tomorrow. Initial leads and actual results can be different. The fundamentals of the economy has not changed. There is just hope that a stable non congress government will bring relief to the common man from ever rising prices of surviving essentials. Do expect a magic wand from the new government. Compare the current Indian economy to the economy which US president Barak Obama inherited under his first term. After nearly five years of rule that the long term growth prospects of US economy are strong. If investors have too much short term expectations from the new government, the chances of a big disappointment are very high. Investor disappointment can lead to sharp correction in Indian stock markets. 

New Indian government -- Initial challenges and my expectations from the new government.

The momentum is towards downside for the rupee. The initial challenge for the new government till October will on (a) Interest rates, as industry desperately wants interest rates to be cut (b) June to November is generally a period where prices of fruits, vegetables and other eatables zoom. People have expectations that there will be a  certain limit to the rise. (c) Proper dealing with monsoon which generally results in drought in some parts of India and floods in some parts of India. 

On the personal front I would like the benefit to higher prices of eatables to be passed on the small farmers and that soft loans offered by state run banks reaches the small farmers (at the moment soft loans offered to farmers reaches mainly the farmers with large land banks). Steps should be ensured that not a single farmer commits suicide due to heavy burden of loans. 

People living in urban cities should not be untouchable for the new government (like the current UPA government). Affordable healthcare should be increased in urban areas so that they catch with every growing urban population. Garbage disposal units should increased to make cities free from garbage related diseases such as dengue, malaria and other which infects a large section of the Indian population every year and puts a big hole in the pocket of every urban Indian. Travelling/celebrating at night is a nightmare in most Indian cities due to bad law and order. 

Lastly to me unless manufacturing growth rises, India can never be a global super power and/or achieve double digit growth. India has to reduce its possessiveness with imports. There are a laws which are there to promote manufacturing growth and also reduce imports. Strangely or deliberately whichever way one interprets, these laws are never implemented in totality. Indian custom department has to be strengthened to prevent unnecessary imports. 

Usd/inr May 2014:  Rupee can fall to 59.26 and 58.85 as long as it trades below 60.05. There will be sellers on rise as long as usd/inr does not break 60.05

Euro/inr May 2014: It needs to trade over 81.76 to bullish zone. There will be another wave of selling below 81.76 to 81.42 and 81.15

Gbp/Inr May 2014: It needs to trade over 99.84 to prevent further sell off to 99.59-99.32.  There will be buyers only if cable trades over 100.36 today.

Jpy/Inr May 2014: There will be a technical break down below 58.40 to 58.10 and 57.75. Only a break of 59.10 will resume the uptrend