Epaper
Absolutely surprising by any standards, the way the US markets are holding out. Global investment banks were taken a back by their bearish views on the US economy given the solid strength display by the wall street. Dow Jones, trading down by 200 points at one point reversed its gains to end the day up by 35.50 points at 12,145.74 and Nasdaq closed higher by nearly 20 points at 2,263. S&P said that we might be at the end of the write-down period. Crude continued to flirt with life time highs, today making love with USD 111 for some time to end at USD 110.33 on NYMEX. Dollar continue to move lower while Gold hits life time high USD 1000. We can term this as a period of unusual times with Gold,Crude oil making new highs everyday and dollar hitting new lows every day against major global currencies.
On the flip side the Emerging markets along with the European markets are unable to hold their feet on the ground and overreacting to every small negative news and neglecting any big news coming their way. The scenario actually was exactly reverse few months back when US markets used to react to subprime news Emerging markets used to hit new highs. European markets are the scapegoats in both the scenarios.
The only difference to the above mentioned scenarios is the role of market players in the Emerging markets. Few 100 million dollars can turn the market either way. This is no big money for a global investment bank. You can see the same pattern across the Asian markets as it appears global investment banks have gone heavily short especially in Japan, India and China (to certain extent). These players go short in futures and taking advantage of the negative news they beat the indices/stocks with no mercy.
US Markets is no cake walk for these market players mentioned above. There is another herd of investment/trading entities called “Hedge Funds” which can go to any extent in the direction they take. The current trading pattern clearly indicates few big Hedge funds are long in the US markets and giving it a hard time to the global investment majors who are on the bears side. It is not an easy call to predict the winners.
Indian markets are witnessing the opposite pattern due to lack of bull grip on the indices, mutual funds waiting on the sidelines for further dips, lack of retail participation, lack of favourable news flow and definitely slow growth with increase in inflation.
There might not be many takers for the above mentioned view but taking an insight to what happened in the last 6-8 months will clearly indicate that the emerging markets are moving against the Big brother, courtesy the players.
When will this end?
Though there is no specific time frame we expect the way the stocks are falling we are nearing the bottom and we will not be surprised if there is a big bang intraday rally on the lines of Dow Jones the other day, which appears to be a mere dream given the situation. But remember these kind of rallies come out from the blue.
Chartist View : Though the pattern indicates a mildly bearish view for the Sensex and the Nifty we expect the markets to bounce back at least to certain extent given the blood bath yesterday.
— Review written by Research Team @ www.indiabears.com
