Trading party is on full blast but globally things are worsening and looking a bit murky. Yesterday we reached the brink of 20,000 but came back. It seems like we still have a bit more work to do.
But if you are in the Essar Oil’s and RNRL’s of the world, fear not because the trading party is on full blast as you saw yesterday.
Global cues more sticky and quiet today:
It is and it was just a one-day pullback in global markets from the losses and then they are going back into their shell again. Things are still little murky there, little grey.
We nowadays don’t make too much of it but I think it’s a bit unclear what’s going on in the global space and whether we are heading for a deeper correction or not; we don’t know the answer it could just be a few days of edgy trading before which the market stabilize. So the answer to that is little indeterminate at this point but there is a bit of cloudy, murky kind of a trading going on.
However in our local market it’s a free for all for traders – who knows? It’s anybody guess as which are the next five stocks that will go up 20% today; something will for sure but I don’t know which ones.
So there is on the side a trading party, which is engaging a lot of the attention and the trading activity. I am sure traders are making money for the moment so what if the largecap end of the market is not moving.
I don’t know if it can continue forever like this but at least for the moment there are two distinct markets; one is the bigger market, which is tooing and froing having reach 20,000 especially given the global cues and there is another market which is traders market and the momentum market seems to be moving in a zone of its own completely.
On Asian Indices:
It isn’t a pretty picture across Asia this morning, the US fell off and now the Hang Seng is down nearly 4%, the Nikkei is down more than 2%, Kospi is getting on to a 3% cut, Shanghai is down nearly 2% as well. Most Asian markets have lost between on an average 2 -3%, this morning, which isn’t quite encouraging. The Yen too has gone back to 110 and that also is not such a good indicator for us or people who follow the Yen carry trades or risk appetites.
Does the big India bull i.e Chris Wood sound more cautious this time around or does he read all these factors as side issues?
No, he doesn’t. He is a bit cautious in the near-term. Chris Wood is an analyst who I listen to the most carefully because more times than not, he is actually quite right. He has got amazing insight and perspective. Sometimes, it is a matter of time before what he thinks comes through. He could be off by 3-4 months and the market could move against what he thinks but generally he comes around to being right. So he has got amazing perspective. After the chat last evening what came through was that we is a little worried and edgy in the near-term.
So, you can’t put a finger, he would meet a lot of people, he would put his thinking cap on and then something in his gut would be telling him that things are not very comfortable and something is going to go wrong. So what came through was you could not put a finger to what exactly the problem may be. May be it is the US, as he said may be it could be a financial accident, may be it could be commodities unraveling in the next few weeks.
But something is suggesting to him that in the near term from a tactical perspective there might be room for a little bit of caution out here. So I would take that on board because he is not one of those guys who are completely detached from reality and who makes predictions, which don’t come true for one year or two years. He is not completely macro in that sense either, that completely divorced from reality on the screen and just thinking great macro US housing or macro numbers.
I think he is pretty much hands on; he manages relative and an absolute return portfolio. So he needs to look at that. I would take his caution on board as well. He is feeling uncomfortable and I wouldn’t wish it away completely.
It is uncomfortable for global situation as well; it’s like a festering wound?
It is we had a fall in the US and a fairly sharp one and the emerging markets also went a little soft and then we had a big pull back and that was a one-day pullback. That one 300-point rally in the US followed by a big 3% rally in Asia and very quickly we seem to have gone back to those levels again.
Even the yen as a measure of risk appetite that too has gone back to 110 and so either these market are all retesting their recent lows, probably trying to consolidate around those or the message from the screen both in terms of risk appetite reflected in the yen or in terms of emerging markets and US market performances that they are not out of the woods yet, there is still more pain out here and what we saw a couple of days back may just be relief rally on slightly benign expectations of the credit market situations for the financials.
One doesn’t know how it will pan out but right now edginess is visible clearly in the global space. I think they all need to move around a bit before coming to any kind of conclusion on whether they are out of the woods and a fourth quarter rally is starting or a big sell off is lurking somewhere down the corner.
I would watch the yen quite closely because two days back it looked like that the yen might have turn conclusively and that would give you a sense that risk appetite is back big time for emerging markets but the way it is moving today, I think it is betraying some more apprehension.
This is not to say that everything is breaking down and the world is looking extremely bearish but just that the world is looking a bit uncertain and so maybe premature to jump to conclusions.
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