Yen-abling a bear arrest!
For fast acting relief, try slowing down.
After a 16% fall from the top in the Sensex, the bulls can hope for some relief today. A positive trend across Asian markets could well pave the way for a higher opening. Most stock benchmarks in Asia are up between 0.5-1.5% following Monday's mayhem. The reason one may ask. Yen, the much dreaded Japanese currency, has broken the sequence of three consecutive days of advance against the dollar and the euro.
Another relief could come from Friday's FII figures. Foreign funds, which have been a major driving force behind the four-year rally, actually pumped in Rs3.25bn ($73.3mn) on a day when the Sensex lost 273 points. Mutual Funds on the other hand were net sellers to the tune of Rs2.09bn on the same day.
Monday's provisional data from the NSE shows net selling of Rs7.32bn by FIIs. However, one has to wait for the final figure from market regulator SEBI before jumping to conclusions. In the F&O space, they were net buyers of Rs850mn.
We expect a technical (or should we say sentimental) rebound at the start of trading. F&O indicators point to an oversold situation with the Nifty March futures trading at a significant discount. Having said that, just like one swallow doesn't make a summer, one should not get carried away as there could be fresh selling post a rebound. So, take every bounce with a pinch of salt. Short-term traders are likely to be the worst hit, while for those who idolise people like Warren Buffet this is the ideal time to cherry pick one's favorite stocks.
Things are going to be pretty volatile this month. Unless there is renewed buying from the bulls at lower levels, this market will continue to be choppy with mostly negative bias. Also, inflation and interest rates have to stabilise. Globally, the liquidity factor has to improve considerably. Valuations are still quite high despite the correction. Global risk appetite seems to be on the wane and the risk-reward ratio has swung in favour of the former. Caution is the key word as making money won't be a cake walk this year.
US stocks slumped for a third day running as investors continued to exit equities amid worldwide weakness. Worries about the fallout from the sub-prime mortgage lending business and fears of defaults in the housing market also added fuel to the fire.
The global selloff in equities pushed yields on US Treasuries to levels reflecting expectations the Federal Reserve will cut interest rates this year. The S&P 500 and Dow Jones touched their eighth decline in nine days.
The S&P 500 lost 13.05 points, or 0.9%, to 1374.12. All 10 of its industry groups retreated. The Dow slipped 63.69 points, or 0.5%, to 12,050.41. The Nasdaq fell 27.32 points, or 1.2%, to 2340.68. All three benchmarks closed at their lowest since November.
In currency trading, the dollar fell to a three-month low versus the yen. The dollar rose, however, versus the euro after the European currency also slumped versus the yen.
Treasury prices were little changed, with the yield on the 10-year note at 4.5%, little changed from Friday. COMEX gold for April delivery fell $4.90 to settle at $639.20 an ounce.
US light crude oil for April delivery fell $1.57 to $60.07 a barrel after the slide in global markets spread to commodities. The front-month contract was trading nearly flat in extended trading in Asia.
Russian stocks fell sharply, weighed down by declines in commodities and Asian stocks. The RTS index recouped some of its early losses, but ended down 3.2%. It is now down 9.6% on the year, making it the worst-performer year-to-date among major global benchmarks together with India. In Mumbai, the benchmark BSE Sensex closed down 3.7%, for a 10% decline on the year.
Latin American stocks fell as investors continued to move money out of emerging markets. In Sao Paulo, the Bovespa index fell 2.8%, to finish at 41,179.16 and Mexico's IPC benchmark index of the 35 most traded shares fell 2% to 25,788.37. The Bovespa in Brazil is now 7.4% on the year, and the IPC is down 2.5%.
European stocks dropped for the fifth session in a row with investors worried about a host of concerns including mortgage lending in the US, the strength of the Japanese yen and Chinese stock valuations.
The German DAX Xetra 30 dropped 1% to 6,534.57, the French CAC 40 fell 0.7% to 5,385.03 and the UK's FTSE 100 lost 0.9% to 6,058.70.