Oops!! Speed breaker again… When the markets are looking set to accelerate, we are watching yet another meltdown in US.
Dow Jones was again down 250 pts on Friday, on anticipation that Fed may not cut interest rates as much as markets wants. The unemployment data released by the USA Employment commission saw the unemployment levels touching the 4 year peak. Also, the oil prices are almost near to its all-time highs.
It seems that these factors may again keep the US markets range bound this week. And chances are omnious that this bearish trend may spill over to European and Asian markets. Thus, as an investor, it is better to sit on sidelines and watch the trends as they unfold.
The major cause of such volatility is "uncertainity". Nobody knows how deep the sub-prime factor is. Nobody knows about the fate of Indian Government. Nobody knows whether USA economy get slowdown or not. And if it slowdowns really, then nobody knows the extent of its damage to the Asian economies. Everyone, be he an expert or an investor like you and me, we are just living on assumptions.
Amidst such scenarios, it is likely that markets will remain range bound this year. Thus, the best option would be to invest cautiously and take positions only after the broader picture clear a bit. Put your money in quality stocks on every dip and stay invested.
Anyways, let come back to the coming week. The current week may see some correction due to weak global factors. Also, Indian stock markets have seen uptrend for 2 weeks continuously and small correction is always round the corner. Though, my gut feeling is that Indian stock markets may not fall too much and one can see domestic institution buying this week.
Hence, I would like to buy the good quality stocks, especially in Mid-cap on the dips. That’s why I have refilled my trading account with cash to lap up on every good opportunity.
Monday and Tuesday can see some correction. Late Tuesday and Wednesday may again see some buying in the market. Thursday and Friday may depend upon the global factors persisting at that time.
Let’s look at some important factors that may affect the markets this week:
1. Bullish Asian Currencies– Yen is again looking bullish and it may rise this week. Ditto can be seen in Rupee as well. If indeed it happens, then it will have an adverse affect on the market.
2. Redemption threat – If the period of volatility persist in equities for some time, then there are chances that investors will start shying from this mode of investment. Hence, the chances may occur when hedge funds have to redeem some cash from the equities to fulfill the redemptions.
3. Fed meeting – Fed is scheduled to meet in the third week of September to decide on interest cuts. There is a wide spread rumor in the market that if markets remain stabilize till the time Fed meets, the interest rates cut won’t be much. Hence, proponents of interest cut rates may wish / act to des-stabilize the markets worldwide to pressurize the Central bank to reduce interest rates.
4. Good inflation numbers- India Inflation numbers are coming good for last two weeks and hence, it may boost the sentiments in the market that RBI policies have acted well for the Indian economy. Hence, long-term investors may again start pouring money in Indian stocks with a view of good and stable Indian economy.
5. Pre-results activities – the half yearly results are due to come soon. Hence, one can see renewed activity in Indian stocks and shuffling in the portfolio of Mutual Funds and FII investors.
Thus, the word for this week could be “Speed-breaker”. Friends!! Drive your investment vehicle car carefully. Watch out for the speed-breakers early and slow down the vehicle accordingly. Anyone can drive vehicle on expressways, but driving the car on roads with potholes is the test of your driving skills.
Come; let’s test our skills this week. :)
Dow Jones was again down 250 pts on Friday, on anticipation that Fed may not cut interest rates as much as markets wants. The unemployment data released by the USA Employment commission saw the unemployment levels touching the 4 year peak. Also, the oil prices are almost near to its all-time highs.
It seems that these factors may again keep the US markets range bound this week. And chances are omnious that this bearish trend may spill over to European and Asian markets. Thus, as an investor, it is better to sit on sidelines and watch the trends as they unfold.
The major cause of such volatility is "uncertainity". Nobody knows how deep the sub-prime factor is. Nobody knows about the fate of Indian Government. Nobody knows whether USA economy get slowdown or not. And if it slowdowns really, then nobody knows the extent of its damage to the Asian economies. Everyone, be he an expert or an investor like you and me, we are just living on assumptions.
Amidst such scenarios, it is likely that markets will remain range bound this year. Thus, the best option would be to invest cautiously and take positions only after the broader picture clear a bit. Put your money in quality stocks on every dip and stay invested.
Anyways, let come back to the coming week. The current week may see some correction due to weak global factors. Also, Indian stock markets have seen uptrend for 2 weeks continuously and small correction is always round the corner. Though, my gut feeling is that Indian stock markets may not fall too much and one can see domestic institution buying this week.
Hence, I would like to buy the good quality stocks, especially in Mid-cap on the dips. That’s why I have refilled my trading account with cash to lap up on every good opportunity.
Monday and Tuesday can see some correction. Late Tuesday and Wednesday may again see some buying in the market. Thursday and Friday may depend upon the global factors persisting at that time.
Let’s look at some important factors that may affect the markets this week:
1. Bullish Asian Currencies– Yen is again looking bullish and it may rise this week. Ditto can be seen in Rupee as well. If indeed it happens, then it will have an adverse affect on the market.
2. Redemption threat – If the period of volatility persist in equities for some time, then there are chances that investors will start shying from this mode of investment. Hence, the chances may occur when hedge funds have to redeem some cash from the equities to fulfill the redemptions.
3. Fed meeting – Fed is scheduled to meet in the third week of September to decide on interest cuts. There is a wide spread rumor in the market that if markets remain stabilize till the time Fed meets, the interest rates cut won’t be much. Hence, proponents of interest cut rates may wish / act to des-stabilize the markets worldwide to pressurize the Central bank to reduce interest rates.
4. Good inflation numbers- India Inflation numbers are coming good for last two weeks and hence, it may boost the sentiments in the market that RBI policies have acted well for the Indian economy. Hence, long-term investors may again start pouring money in Indian stocks with a view of good and stable Indian economy.
5. Pre-results activities – the half yearly results are due to come soon. Hence, one can see renewed activity in Indian stocks and shuffling in the portfolio of Mutual Funds and FII investors.
Thus, the word for this week could be “Speed-breaker”. Friends!! Drive your investment vehicle car carefully. Watch out for the speed-breakers early and slow down the vehicle accordingly. Anyone can drive vehicle on expressways, but driving the car on roads with potholes is the test of your driving skills.
Come; let’s test our skills this week. :)
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