It is Monday morning and the mood is far from festive. The mahurat trading session on Friday was not very gung-ho. The markets corrected in the last 10 minutes of trade. Global cues look terrible today. The US markets took another knock on Friday.
Markets in the region seem to have picked that up and are correcting accordingly. As we head into trade today, the picture doesn’t look good. We may see a cut in today’s trade.
The mood this morning is very scratchy:
I think we will get cut some more, would be extremely surprise if did not; resilience, decoupling all of it is fine but the world is in a bit of a tizzy now, we have had an amazing run. I think some of the fat should go off our market as well. I don’t know where we will stop but a bit of cut for sure.
On these days of global weakness we sometimes or more often than not been starting weak and then pulling back so people have got into the habit of that but one of these days we will probably not recover during the course of the day and that will probably make traders a bit nervous. So I suspect that we have got a bit more of a correction and we will be lucky to get away with a bit more of a correction the way global things are going.
Sentiment during the Friday trade:
I think it must have not gone down very well but we tend to overdo all these festival things. At the end of the day the screen is there to make money. If auspicious the occasion might be but people will do what they think the markets are going to do next so beyond a token trade or two I don’t think Diwali or any other festival matters. At the end of the day the business is about making money and you have to be rational and practical about those things so not surprised at all, if the market had to go down and they are going down on the Mahurat session and that is not so significant but I think you can’t wish away the global weakness, which is now washing, across the world. We have not had a very large correction too just 5-6%. I think you can easily justify a little bit more of a fall out here.
Asian Indices:
It is a very bad picture across Asia this morning. Nikkei is down to the lowest point of the day, 3.25% down; China is down nearly 4%. Hang Seng is down 4%, Korea is down nearly 4%. Straits time is down almost 3%, Taiwan is down 3.5%. These are very sharp cuts across Asia responding to what happened in the US, now Asia is getting quite jittery.
This morning we are fighting bigger cues, global ones
A: A few things are going wrong. First the US market crack is a little sharper. You have had bad days but the ferocity with which the Dow is back from 14,000 to 13,000 is a little alarming.
For people who follow techinicals the 200 DMA broke very easily for the Dow and as we have seen for our market as well the 200 DMA at least in the near-term tends to be a strong support and the US market collapsed under that very easily.
Outside of technicals, the news flow is consistently bad. Some of the technicals are changing the yen is at 110 and we haven’t seen great selling across the region because of unwinding but again the yen, the speed with which it is come down from 116 levels to 110 is quite alarming as well.
One should also note that in the last couple weeks its is been selling pretty much across the region, across Asia from the global investors and it is not just India where money has gone out of because of our own particular issue but even markets like Taiwan, Korea, Thailand have all been losing money.
It’s not a great situation. The yen remains a joker in the pack, money is going out, people are extremely worried about what is happening in the US and there will be a time as we get closer to December when everybody starts talking about the Fed rate cut because it is looking inevitable as the Fed has a eye on the market and the market is looking extremely weak but all these kinds of rumours which are doing the rounds; one day Barclays, the other day Wachovia, so it looks like the financials which were a very influential part of the market are in serious trouble.
So if you have a global correction now, which is quite significant or more than what people thought earlier then it is entirely possible that the emerging market universe also draws down more. We haven’t seen more than 5-7% draw down even after today’s fall in most of the emerging market. It is entirely possible that all these markets correct 10-15% in which case we will be dragged in as well.
I think one needs to be fearful and cautious of what’s going on in the world today and it may not be a good idea to be like and ostrich and say it’s their problem we are fine, we are a great market and therefore we will continue to rally.
We have been the best performing market in this global weakness but I don’t know if that will act against us now.
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