INR is vulnerable in 2019. While the short term expectation is of stability with 68.50 level possible, the second quarter of 2019 could bring in higher volatility as tariff war negotiations would head into a decisive phase. We expect the Fed to go ahead with one more hike in the first half and with not-too-dovish a commentary, resulting in pressure on risk assets. We expect INR to sharply move above 75+ levels by the second half of 2019 and eventually even higher if markets continue to wobble.
Equity markets would see massive bouts of volatility as the regime of central bank money printing has officially ended in 2018. One can expect sharp falls in most equity indices with intermittent ripping rallies in 2019. A 20% fall in Dow and a 20% fall in NIFTY is a plausible scenario.