FIIs Dumping Crores: Is the Indian Market Recovery a Trap?

Markets Overview

It has been a good month, and the end of the month was also positive. After a debilitating fall in March and April, the market has pretty much recovered from that decline.

Looking at the week, the weekly candle on the Nifty was extremely flat with a 0.42% gain. Nothing was lost and nothing was gained. We saw a fantastic run for three weeks at the beginning of the month followed by a falling week, and now the market has stabilized.

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Oil has not really gone anywhere; the same price available in 2008 is available now. Despite massive money printing and inflation over the last 18 years, oil remains at the same price. Essentially, we have taken advantage of inflation-adjusted oil for years, but eventually, this may come back to bite us.

The estimate for the RBI is $80 a barrel for this year. However, oil has been elevated this week, moving from the 90s to $114 or $115 in the morning before cooling off slightly. If these prices sustain for even a few more months, it will cause significant distress for the Indian balance sheet. This is an issue that often gets ignored.

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Rebalance Update for the week