Last week has been extra-ordinary for the markets. Aftre the initial meltdown, markets seems to have recovered, till Thursday afternoon, when BNP Paribas sub-prime mortgage woes came into surface.
This acted as a trigger that took global indices to another low. It seems that markets have catched the sub-prime mortgage fever that may take another few weeks or months to recover.
One of the major concerns pertaining to this fall is the "uncertainity" - uncertainity on how deep the issue of sub-prime mortgage is and how many banks / financial insttutions have burnt their fingers in it?
Thus, it seems unlikely that markets will go up steadily this week. Though, some amount of short-covering is seen, which is common after such volatility. Long term and medium term investors can still wait as more correction can be seen in the markets. Intraday Traders need to
track local and global events quite carefully since every name dragging into sub-prime mortgage woes will trigger a fresh correction in the market. Hence, caution is the word one must remember. Till the time, the cloud of uncertainity about sub-prime clears a bit, the market expected to remain volatile.
Below are some of the upside and downside factors that are expected this week:
Upside
1) The current side last week may result in a bit of short-covering this week around.
2) The money from Middle-east, is yet to enter into Indian markets. Thus, this correction may result in some of this money coming in.
3) RBI annoucement that Indian Banks and FInancial Institutions are laregly unaffected from sub-prime woes
4) Hawkish stance by Fed and European banks on this issue.
5) Rate cut by Fed to infuse fresh liquidty into the equities.
Downside
1) Fresh names of banks and financial institutions coming into sub-pprime trap
2) yen appreciation against dollor will eject more liquidity from stock market.
3) Rupee appreciation against doller will invite more volatility in the stock market
4) Sub-prime turn out to be a global disease
5) fear of Global Recession due to US economy slowdown.
Wish you a very happy investing this week!!!!!
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