India has managed to shrug aside worries of the Chinese slowdown. The advantage that India offers as an alternative for the FIIs will act in favour of the markets here. Though some consolidation of gains can be expected the overall mood is expected to continue remaining positive. Some more upside (though with intermittent profit booking) is still in the offing. The broader trend definitely is taking cues more from the political developments than anything else right now. Keep sipping gradually to reap benefits over the longer term.
Yesterday’s market action brought to mind something that was very fashionable a few years ago – decoupling. While the entire Asian pack was down in the dumps, the Indian market went on to scale a fresh life time high yesterday. Though it did consolidate later, the bulls were anytime better off the bears. The character of the market is in for a change and this is just the beginning. As we move closer to elections, it will get more and more disinterested in global news flows.
In fact, there is nothing much that can probably come to disturb the markets from global shores. The US taper is already being priced in, while Europe has not really come up with any new nuisance for quite some time now. With central bankers in the Euro zone acting quite proactively, the possibility of any major hassle emerging out of that part is remote at least over the shorter term. What really needs attention are the economic developments in our own backyard. Asia seems to be facing some ups and downs. Japan and China, the two powerhouses of economic development in the Asian region are currently facing problems. International trade in both these countries is slowing down and that should be reason enough for the Asian markets to get jittery.
But as mentioned earlier the one good thing about the Indian markets was that it managed to shrug aside worries from that quarter and maintained its upward momentum going into a fresh week yesterday. One way to look at it is the interest of FIIs and therefore the rise of the Indian markets. With Japan and China faltering, Russia in a geopolitical turmoil of sorts and nothing much heard of about Brazil for quite some time now, India seems to be the most favoured bet with FIIs as far as the emerging market pack is concerned. The depth that the Indian markets offers has always been a plus point. With more clarity emerging on the political scenario here, it wouldn’t take much time for the optimism to turn into euphoria.
But at times like these, retail investors need to understand that chasing the herd could be dangerous. In fact, it would be much better to check on whether you really have a herd out there. It could well turn out to be a small pack of Wall Street wolves with hot money in tow who could pull the plug at the slightest hint of unease.
With the markets at their life peaks, it becomes extremely important for retail investors to be sure fo what they are witnessing. As far as it can be classified as rational euphoria and not irrational exuberance, you could play safe and invest for longer term gains.
For now, Asia is at the centre of market activity globally. A Chinese slowdown has come as a big worry for markets across the world. US stocks reacted yesterday to the gloom with benchmark indices retracing from their higher levels. The S&P 500 ended the day a point lower while the Dow which at one point was down by as much as 100 points, finally gave up 34 points from its previous close. Earlier in the day, European stocks too had declined on the same set of worries. Global growth concerns seem to have come back to haunt markets globally.
Asian markets are mixed this morning. The Nikkei has recovered what it lost yesterday and is currently trading 0.80% up from its previous close. China continues with its slide, with the Shanghai Composite having declined a further quarter percent from where it had closed yesterday. Hong Kong and Korea are on the brinks and Singapore, Malaysia and Indonesia have recovered a bit of their losses.
India has managed to shrug aside worries of the Chinese slowdown. The advantage that India offers as an alternative for the FIIs will act in favour of the markets here. Though some consolidation of gains can be expected the overall mood is expected to continue remaining positive. Some more upside (though with intermittent profit booking) is still in the offing. The broader trend definitely is taking cues more from the political developments than anything else right now. Keep sipping gradually to reap benefits over the longer term.
