Chinese currency story faded yesterday after Wall Street closed in the red. Asian markets witnessed a stunning rally courtesy Yuan de-pegging news.
China lowered its U.S. dollar central parity rate to 6.7980 yuan on Tuesday from 6.8275 yuan the previous day after allowing the local currency to sharply appreciate in the spot market on Monday. The news sparked a quick pull back in global equities from the lows of the day. But we still believe the rally has little room top move up.
Current situation can be best termed as lower upside chances and more of a downside though markets are behaving the other way. The bullish sentiment being injected will fade sooner than later.
Indian equities might decouple from global scenario given the situation. More and more inflows are expected as ULIP news will add fuel to the fire.
Stay invested and add on declines. We still do not buy the theory of bull run in the short term in the current scenario