Indian stock markets along with the global markets
(China, Hong Kong) returned to where they were a year ago. It is the steepest
fall next only to fall during 2008 financial crisis.
Is one more recession on its way? Probably not but will
have to wait and see what comes out of Pandora ’s Box (China). It looks more
like the currency wars triggering the correction. China has lots weakness than
seen on the surface. Its Govt. is throwing hundreds of billions into its stock
market and took many other measures like banning short trading but no matter
what it does, its stock markets are falling any way.
Who is selling? Where the money is leaving to? Western stock
markets are falling hard too. Is anyone taking shelter in commodities? No way,
Gold has just finished bleeding and the way oil is falling, it looks like it
will become cheaper than water. That leaves bonds and cash. That is what
investors are doing now. They are selling off their investments to stay on cash
or buy US Treasury.
If there is problem in China, why Indian markets have to
see such a sell-off? No retail investor has the answer. If it was an
overreaction then markets will make a come-back else get ready to hear
something which we are not aware of now. FII’s are selling in both equity and
debt markets, so Rupee is hit hard too.
It has always been like this. Indian markets
are shallow. I would like to take the example of Tata Steel. It is a big, well
established firm. It is as historical as independent India with a clean
management but all these tags did not help its stock price. From 200, it rose
to 500 to only come back to 200. The time it took to rise and to fall was
approximately the same.
Though none of the metal stocks are doing well, we need
to watch out this stock. If it falls too steeply from here, then India’s story would
be at risk too.
No comments:
Post a Comment