I track these 4 indices for gauging the potential challenges for Indian stock market. (Courtesy @itsTarH for sharing on Social Media)

1. Brent Oil prices
2. US Dollar Index
3. INR price against USD (USDINR)
4. US10Y bond yields

Why? Here is my take:

1. Brent Oil prices: Higher crude oil prices increase India's import bill (India is a net importer of crude), leading to a higher current account deficit and inflation, negatively impacting sectors like aviation, paints, and transportation while benefiting energy companies.

2. US Dollar Index: Indicates global risk aversion, often leading to foreign institutional investor (FII) outflows from emerging markets like India. It can weaken the rupee and increase import costs, pressuring inflation.

3. USDINR: Raises import costs (e.g., oil, technology), causing inflation and negatively impacting sectors dependent on imports (e.g., FMCG, oil marketing companies).

4. US10Y yields: Indicate higher US interest rates, making US bonds more attractive, leading to FII outflows from Indian equities. This negatively affects stock markets, especially high-valuation stocks.

Also wildfire in LA is causing chaos in US markets with estimated loss of around USD 150B. This could just act as trigger for a long pending corrections in US markets too.

Now all 4 have come together once again and are on rise. Indicating we are in for tricky days ahead. Risk is high and reward is low for bigger investment in the market

#nifty #StockMarketIndia #LosAngelesFire