Trading for Samvat 2072 began on a positive note and the markets gained. Little did people know that the gains would disappear on the very next day of trading? Samvat 2071 ended with losses of about 3.9% on the benchmark indices. Interglobe Aviation the owners of low cost airline Indigo listed on the last day of Samvat 2071 and had a flying start. The share has crossed Rs 1,000 and is up 30% over its issue price of Rs 765.
There was an attack of urban terrorism in Paris on lines similar to what we witnessed in Mumbai in 2008. The way terrorism is now targeting human life is indeed appalling. This is worse than war where atleast one knows the enemy. Here the person sitting next to you may be the human bomb or the person who has the detonator for something that he has just planted. Markets would react negatively at start but bounce back from thereon as history shows that markets have never succumbed to such unnatural tragedies or human disasters.
Global markets have turned weak and are now worried about Fed increasing rates in December. The concern is twofold as if rates are raised it would affect because fro near zero they would have to pay something. On the other hand if they don’t raise rates it would mean that even after seven years the economy is not strong enough to stand on its own. The Dow Jones lost 665.09 points or 3.71% to close at 17,245.24 points. In a long time I do not recall the Dow losing so much in one week, while there have been days when it may have lost 300 points or more in a day but recovered thereafter.
Our markets in a festive week lost about two and a half percent and have distinctly turned weak. There is some automatic support which kicks in when NIFTY touches 7,500 and the last close was at 7,762 points. The number of people who believe that 7,500 can break and NIFTY touch 7200 or thereabouts is fairly large. One other thing which needs to be noted is that in the last couple of weeks the so called defensive sectors like pharma and IT have cracked. It maybe one or two companies causing the sectoral indices to crack but the numbers say that they have cracked.
Data has been a bit disappointing in the country with food inflation causing the retail inflation to rise. The worry is that if this continues to happen chances of another rate cut from RR may vanish. We need that second cut as badly as we needed the first.
The announcement of FDI in 15 sectors was a welcome step and the markets want more. A flurry of such announcements would set the forthcoming Winter session of Parliament alive and kicking and it would be interesting what new stands the opposition has to stall the functioning of the house, something for which they were not elected.
S H Kelkar lists today and after the fireworks from Interlobe, this issue is expected to do well. More of this next week and in a week when the markets are supposed to have a negative bias let us look for that one positive which could turn markets.