Autobot, Transform!

Anyone who has watched Transformers is aware of the command ‘Autobot, Transform’, which makes Autobots – humanoid robots from the planet Cybertron instantly transform into machines, typically automobiles like cars, trucks and other road vehicles. They also have the ability to, in a jiffy, transform into their former form.

The markets, in the last few days, have been seeing this instantaneous swinging in directional trend. From bulls to bears and vice versa, and mind you with considerable gravity, the markets have been oscillating heavily at command-like cues.

The entry of the new RBI Governor, and his plethora of first day action, resulted immediately in the reversal of a strong bearish sentiment that had gripped the markets. He announced a host of measures that resulted in a rather quick cheer in the form of an over-400 points rally on the Sensex yesterday.

Not ruling out the high probability of the positive results of the measures taken by Raghuram Rajan, but keeping out the sentiment-driven rally that is highly uncertain on stamina, having a look at the larger picture on the global canvas may help better determine forces that have the capacity to overpower these measures.

The US economy is inching back on track. Signals from the Federal Reserve have been indicative of a monetary policy easing starting later in September unless, the August employment report released by the government is a disaster. So all eyes have now turned to the Labor Department’s release at 08:30 Eastern Time (18:00 GMT +5:30) on September 9, 2013. This, we feel will again shout out a command for the markets to transform on.

Till then, the markets may continue cheering about the prospective results of the actions taken by the new Governor of the RBI.