The markets are expected to open bullish on Monday and Tuesday due to Fed discount rates interest. On the other side, bears will try to decrease the momentum by discounting the political uncertainties prevailing in the country on the account of Nuclear-standoff between the Left parties and Congress. So the markets are expected to remain bullish somewhere between 15-350 points for the first two days of the week.
From Wednesday onwards, there can be a threat of sub-prime issue again cropping up and if it occurs, its affect can be seen in European and Asian markets including that of India.
From the current facts, it seems that, the USA economy has successfully transferred its problems to the European and Asian Financial institutions and banks. Thus, the ultimate sufferers in the near future can be these economies who have invested substantially in sub-prime mortgages.
Even the steps taken by Fed and other central banks are just a small relief measure. It is like controlling the fever of the patient who is suffering from viral fever by injecting a dose. How big the problem is still unknown and this cause the major problem. It seems that by Wednesday onwards the effect of the temporary relief may largely reduced and hence, one can see a fresh bout of selling in the markets from thereon. Also domestic factors like the uncertainty within the government circle due to nuclear stand off may rub salt on the wounds of the bleeding Indian markets.
From Wednesday onwards, one can see a downside of about 600-700 points and hence, "caution" is the word that one can follow this week. Till one see a sustain upwards rally, the small investors must remain outside and remain cautious.
Below are the few upsides and downsides that can affect the Indian Stock markets this week:
Upsides
From Wednesday onwards, there can be a threat of sub-prime issue again cropping up and if it occurs, its affect can be seen in European and Asian markets including that of India.
From the current facts, it seems that, the USA economy has successfully transferred its problems to the European and Asian Financial institutions and banks. Thus, the ultimate sufferers in the near future can be these economies who have invested substantially in sub-prime mortgages.
Even the steps taken by Fed and other central banks are just a small relief measure. It is like controlling the fever of the patient who is suffering from viral fever by injecting a dose. How big the problem is still unknown and this cause the major problem. It seems that by Wednesday onwards the effect of the temporary relief may largely reduced and hence, one can see a fresh bout of selling in the markets from thereon. Also domestic factors like the uncertainty within the government circle due to nuclear stand off may rub salt on the wounds of the bleeding Indian markets.
From Wednesday onwards, one can see a downside of about 600-700 points and hence, "caution" is the word that one can follow this week. Till one see a sustain upwards rally, the small investors must remain outside and remain cautious.
Below are the few upsides and downsides that can affect the Indian Stock markets this week:
Upsides
1) If the Central Bank takes further steps to resolve sub-prime issue, there could be a resurgence of renewed confidence among the investors worldwide.
2) If yen depreciates against the dollar, it will ensure the sustain yen-carry trades and hence, ample liquidity in world equity system.
3) Currently, Indian stock market looks attractive in terms of valuations and hence, one can see fresh round of funds entering into Indian equities.
4) If the stand-off between the left and Congress subsidises, the market can see huge upside on the account of it.
5) The hedge funds redemption is another area of concern. If this fear doesn't turn into a reality, then once can see the fresh investments into Indian equities by hedge funds operators.
Downside
1) If Fed does not take clear stand on sub-prime issue, then the market can again go into the moment of despair and uncertainty.
2) Yen appreciated quite substantially last week. If this trend continues, then one can see the unwinding of yen-carry trades, which will result in funds going out of markets.
3) Fresh Hedge Funds redemption can occur, since investors' confidence has gone down on the account of last week downside. Thus, if this fears turns into reality, the hedge funds will have to take out the money out from the markets.
4) If the stand-off between Congress and Left actually turns out to be really serious, the markets will surely seen a downside.
5) Any news regarding the collapse of any hedge funds / financial institution can cause jittery among stock markets.
2) If yen depreciates against the dollar, it will ensure the sustain yen-carry trades and hence, ample liquidity in world equity system.
3) Currently, Indian stock market looks attractive in terms of valuations and hence, one can see fresh round of funds entering into Indian equities.
4) If the stand-off between the left and Congress subsidises, the market can see huge upside on the account of it.
5) The hedge funds redemption is another area of concern. If this fear doesn't turn into a reality, then once can see the fresh investments into Indian equities by hedge funds operators.
Downside
1) If Fed does not take clear stand on sub-prime issue, then the market can again go into the moment of despair and uncertainty.
2) Yen appreciated quite substantially last week. If this trend continues, then one can see the unwinding of yen-carry trades, which will result in funds going out of markets.
3) Fresh Hedge Funds redemption can occur, since investors' confidence has gone down on the account of last week downside. Thus, if this fears turns into reality, the hedge funds will have to take out the money out from the markets.
4) If the stand-off between Congress and Left actually turns out to be really serious, the markets will surely seen a downside.
5) Any news regarding the collapse of any hedge funds / financial institution can cause jittery among stock markets.
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