$DXY weakness and EM markets: $NIFTY more upside?

The recent weakness in DXY is well documented. We have analyzed it here in detail in our blogs. This weakness is giving wings to all kinds of risk assets including Ems. One of our favorite EM in this space has been India and NIFTY index for quiet some time. It is the only EM which is close to beating S&P 500 over the last 5-year period. We have been recently bullish at NIFTY and published new targets on June 6. Please check the post in the link here.

NIFTY: New highs incoming; 27500 can be cycle highs for NSE:NIFTY by RabishankarBiswal — TradingView

The road to the medium-term target of 27500 on NIFTY has to do with the weakness of $DXY. As we see, lower lows and lower highs in the Dollar index DXY provides the required boost to risky assets like Stocks, Crypto and EMs. Even if we have some recent choppiness in the market the upward momentum will continue. By the end of July, we might see DXY at 96 up 2.5% and NIFTY @ 26000 up 5%.

Verdict : Pair Trade : Short DXY to 96 and Long NIFTY to 26000.