Weeks after the election results, we saw oil prices spike and the trade wars worsen. Yet, FII flows into Indian markets held steady and India’s forex reserves hit an all-time high. Elsewhere, gold prices hit a six-year high.

Clearly, something very interesting seems to be happening in currency, gold and stock markets. On one hand, trade wars are seeing gold’s lustre return. Central banks are allocating more monies to buying gold. On the other hand, Indian stock markets are seeing newer investors pour forex into Indian equities.

This has eased pressure on the rupee significantly and even the rising oil prices haven’t hurt the domestic fuel prices much. The macros clearly need swift improvement. To get that in place, we need sustained investment inflows, softer oil prices and higher gold prices. If gold prices rise further, domestic demand will drop and this, in turn, will help our trade deficit. If oil prices soften, then we could see lower inflation and softer fuel prices. This can help the return of growth. If global investors see India benefiting from the US-China trade talks, we could see a shift in sentiment possibly when the budget captures investor imagination.

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