Oil’s 80-Year Warning & The Rupee Collapse

Market Update - Thursday, 30 Apr

If you zoom into your screen to look at the oil chart for the last 80 years (Youtube Video), you can see three distinct phases. One phase lasted until 1978, followed by a range between $10 and $35. For the last 18 to 20 years, we have been stuck in a specific range. From a purely technical chart perspective, it is important to consider what happens if this range is broken, especially as oil production has peaked.

Looking at the charts, it is very interesting that while the Nifty fell below 24,000 to 23,800, it recovered back to nearly 24,000. The quick recovery of the index on a day when the rupee was collapsing and oil was rising dramatically shows a reasonably resilient outcome. We saw a 0.74% loss today, but we remain in the same range held for the last few weeks, which is the only good news currently.

• The Nifty Junior was down 1.24%, and the short term has become negative. However, long tails on the charts show recovery from the bottom, indicating that buying comes in as soon as major selling takes over.

• Mid-caps also recovered slightly after a 2% fall to close near minus 1%, while small-caps fell 0.44%, showing an even better recovery from 16,560 to approximately 16,700.

• The Nifty Bank lost 1%. While some PSU banking results have been disappointing, some private banks have done reasonably well, though the Nifty Bank looks the most sluggish of all the charts.

• Gold saw an uptick today, rising 1.8%. In conjunction with the fall of the rupee, gold is back near 15,000 per gram, maintaining a steady sideways move.

• Crude oil has been jumping; it is currently at minus 2.16% from yesterday's close, but it was up massively yesterday and earlier today. We are at a crucial point where a breakout from this zone could be catastrophic, so there is hope that ceasefire efforts will reach fruition.

Other Market Triggers

• Regarding advanced decline trends, there were 363 declines to 136 advances. Throughout the day, advances tried to make up the loss but could not reach a 50-50 mark.

• Selling was seen in Hindustan Unilever, which was sold into despite results that were perhaps better than expected.

• Eternal also saw selling after recent blockbuster results, and both private and PSU banks lost ground.

• Conversely, Sun Pharma and Infosys have been gaining gradually, and Bajaj Auto looked up today at 4.7%.

• In the Nifty Next 50 space, there were massive sell-offs in metals and zinc. Vedanta went through an ex-date for its demerger and will be split into five companies. The remaining part of Vedanta Limited traded at minus 65% today, while the other four companies will be listed over time, potentially unlocking value through the sum of parts.

• Small gainers in this space included Tata Capital, Chola Finance, Siemens, and Adani Power.

• The mover of the day was HFCL, as fourth-quarter profits rebounded and revenues doubled. HFCL was previously beaten down, but healthy order books from defense deals have caused a jump.

• Syngene International also rose; despite a 19% fall in profits, the stock went up as expectations were likely for a steeper decline.

U.S. Market Updates

• In the US markets, the previous session saw Charter Communications drop 8%. Comcast, Medtronics, GM, and Boeing also lost ground.

• The Dow Jones and Russell were both down 0.6%, while the Nasdaq remained buoyant, up 0.58%. Over the last 12 months, the Nasdaq has provided whopping returns of 37.4%, the Russell 38%, the S&P 500 27.3%, and the Dow Jones 20%.

• In the Nasdaq 100, Intel Corporation rose another 12%. The President continues to tweet about Intel, and the stock continues to rally.

• The government invested in Intel just three months ago and has already seen significant returns. Nvidia was down 1.84%, while Microsoft, Google, Apple, and Meta were flat. Amazon, Cisco, and AMD moved up.

What to watch next ?

• Interesting data from the World Gold Council shows that for the first time, Indians are buying more gold for investment than for jewelry. This is a healthy shift that provides stability to demand. Even those who are not financially savvy in India understand that gold can provide a 12% to 13% annual return.

• It is a cultural wealth preservative. While gold is not the choice for the fastest growth, it is excellent for conserving wealth for generations. If you haven't been buying gold, you should consider allocating some toward it.

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What To Read This Week ?

The Golden Shift: Decoding the New Multipolar World Order

This isn't just about market fluctuations anymore; we are witnessing a tectonic shift in global power dynamics. Traditional alliances are fraying, and the financial bedrock of the last century—the US Dollar—is facing an existential challenge. Here is a breakdown of why the world is looking East, and why Gold is reclaiming its throne.

The Cracks in the Western Alliance

For decades, countries like Canada, Germany, France, and the UK were the bedrock of US influence. However, recent data from Politico reveals a "massive shift" in sentiment. These long-term allies are no longer viewing Washington as their sole North Star. Instead, a surprising trend is emerging: a preference for alignment with China over the US.

This isn't just a political preference; it’s a strategic pivot. These nations, which previously had little reason to depend on Beijing, are now recalibrating their futures in real-time.

From Hegemony to a Multipolar Reality

We are moving away from a world dominated by a single "hegemon" (the US) toward a Multipolar World. In this new era, no single currency will hold absolute power over others. As US influence dilutes, the "exorbitant privilege" of the US Dollar begins to fade.

When the world stops believing in a single superpower, they stop hoarding that superpower's paper. This leads to De-dollarization, where central banks across the globe begin reducing their exposure to US Treasuries.

The Math of the "Gold Re-rating"

If central banks decide to return to historical levels of gold reserves relative to their public debt, the impact on gold prices would be explosive. Report suggests that for central banks to balance their sheets in a post-dollar world, gold prices wouldn't just rise—they would need to multiply.

While many investors feel gold has "peaked" at current levels, this data suggests we are actually in the "Early Days." If the global order resets, the journey for gold has only just begun.

Protecting Your Purchasing Power

The transition to a new global order won't happen with a loud bang; it will be a gradual, quiet erosion. To survive this transition, your wealth must be parked in Real Assets.

• Gold: The ultimate hedge against currency debasement.

• Real Estate: Tangible value that keeps pace with inflation.

• Quality Equity: Ownership in businesses that provide essential value.

Those holding these assets will find their transition into the "New World" much smoother than those left holding devalued paper.

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