The USDINR deserves a mention especially as RBI did the unexpected, or should I say widely expected, leave interest rates alone. After promising to keep policy accommodative the prime objective of the RBI in recent years has been to bring down interest rates to the point that it stimulates demand for credit. In doing so this year it has gone as far as to ignore inflation altogether. That is the surprise element. Now I did expect that food inflation will come down a bit after December due to the new produce hitting the market. That may have created some room for RBI to cut rates. But RBIs own projections have raised the CPI data expectations for the next quarter. In other words, keeping rates where they are amount to a policy of negative real interest rates. And they are clear they want to focus on growth so this policy won't change. What this means for stocks and currency markets is tricky. The policy is pro liquidity and is bearish for the INR, no surprise that the USDINR stopped making new lows from September onward. My sense is that it sets the stage for wave E up toward 78 in the coming year for the USDINR. In the near term, however, the RBI stance will boost stocks as they read the liquidity injection as bullish. We have a case for USDINR and Nifty rising together then. This is a mirage of what they did in 2011 in the post-2009 stimulus era that drove inflation to double digits. Food inflation was elevated [18%] in 2011 but RBI reluctantly only raised rates by 25 basis points spurring a blow-off rally in stocks for an entire month before the market topped. Now that somewhat explains why the market rallied today and may continue to. USDINR on the other hand may continue to build a support base at the bottom end of its long-term trading range, ignoring the relentless decline of the US dollar index in overseas markets.