The economists and traders around the world are engaged in the debate whether its a bear market rally, or the markets have actually turned around. The doom sayers are leaving no-stone to make everyone believe that their time under the sun hasn't finished. Whereas, the investors and money managers around are world are jumping to buy at every opportunity.
Its very difficult to say as of now which way the markets are headed. The short term momentum is certainly on the long side, but the valuations are getting costlier by the day. And unless the economy and earnings show a quick turnaround, we may see an over-heated stock market.
S&P has stayed close to 900 range for a few weeks now, and it has failed to break on the either side. There is good consolidation happening around this range, we may see a decisive move in either side very soon. If one is long vol, it may be a better idea to hedge less frequently as markets may be trending in one direction from here. I would expect S&P to be either below 800 levels or over 1000 levels by the end of June.
VIX also has been staying close to its 30 support levels, and even though it the breached it for a couple of days, it has failed to remain below the range for a longer period. We may see a gradual move up in volatility in the coming days, and I would rather be long vols at these levels.
Nifty has been playing around in the 4200-4500 range now, and contrary to all the initial expectations, markets haven't yet broken below the levels reached after the 'Super Monday'. Shorts have been cleared in the system, and the futures premium has jumped to high levels. Might seem silly to say, but I don't think markets are going to cross 4600-4700 range in the near term. With budget around the corner, long term investors would shy away from committing large funds.
EUR and GBP have been gaining against the USD, and last I saw, EUR was trading at 1.41 levels. Somehow, I am not very bullish on the Eurozone, and think the currency would depreciate. US economy in the shambles, and with General Motors filing for bankruptcy, another chapter in the US economic history comes to an end. However, I don't think EUR or GBP are the alternatives for the future.
Gold has been climbing for over a month now, and is trading close to 950 levels (mostly on the back of USD weakness). Oil has also been moving up, and is currently at 65. If the Oil keeps climbing, and moves into the 80+ zone, we may all be back to square one.
Friday, May 29, 2009
Tuesday, May 19, 2009
Market View: Gone in 60 secs
Election results came out on the weekend, and all the remaining bears in the market were brutally squeezed by the rising euphoria. We saw the first ever up-circuit in the market, and in less than 60 seconds, BSE sensex had risen by more than 2100 points.
Everything has changed in the markets, and FII continues to pump in billions into the markets. As things stand, we may be in for a long up move. There is a big gap in the market, and a lot of people have completely missed this rally.
Like someone said, one shouldn't worry too much about a single day's move. The trick is just to survive to see another day.
Everything has changed in the markets, and FII continues to pump in billions into the markets. As things stand, we may be in for a long up move. There is a big gap in the market, and a lot of people have completely missed this rally.
Like someone said, one shouldn't worry too much about a single day's move. The trick is just to survive to see another day.
Thursday, May 14, 2009
Market View: May 2009
Markets world-wide have seen the mother of all rallys in the past 7-8 weeks, and all across stocks have risen by anywhere between 30-100%. Nifty has moved from its 2700-2800 levels to 3600+ levels!!!
The big turnaround has been led by good financial results (in a system oozing with liquidity, that should have been expected), and some aggressive moves by the fed and treasury officials in US. Everyone could see the 'green shoots' in the economy in the form of falling unemploment numbers, rising output levels, rising retail sales, etc. And the result was an almost angry rally, wiping out all the 'nay-sayers'.
As we stand at the present, everything is up, and lot of people have shifted from the bear-camp to the bull-camp. March was scary as everyone (including me) was giving lower and lower target levels for the Nifty (with people quoting figures as low as 1200!!!). Now there is greater sanity in the market, and there is a suitable opposition to all the gloom-and-doom predicators.
S&P has been flirting with the 900 levels for whole of this week, and after breaking it, has come down again. If it breaks above 900 once more, a move towards 1000 is highly possible. However, if it fails to break it in in another week or so, then we may see the return of blood on the street.
Gold surprisingly has been going up even during this rally, and is currently at 925 levels. With all this bullishness, I would have expected gold to trade at sub-800 levels. So, there is a correction due in atleast one of the markets.
Credit markets have been improving, and JPM Emerging Market index is now at 500 levels. Still much above the pre-Lehman times, but this has improved considerably from its 800-levels seen in October'08.
My view on the Indian Market is that we may see this rally continue till 4000 levels. Unless something goes really wrong worldwide, we may see everything moving up. Elections, which have been the talk of the tinsel town over the past couple of months, may turn out to be a non-event. Either the NDA, or UPA could be making the parliament, and who amongst the two noone gives a damn.
EUR has surprisingly out-performed against USD, and has climbed to 1.35+ levels. However, I still believe its a ticking time-bomb, and might turn out to be very difficult to diffuse (unless the central banks round the world keep pumping liquidity into the system).
The big turnaround has been led by good financial results (in a system oozing with liquidity, that should have been expected), and some aggressive moves by the fed and treasury officials in US. Everyone could see the 'green shoots' in the economy in the form of falling unemploment numbers, rising output levels, rising retail sales, etc. And the result was an almost angry rally, wiping out all the 'nay-sayers'.
As we stand at the present, everything is up, and lot of people have shifted from the bear-camp to the bull-camp. March was scary as everyone (including me) was giving lower and lower target levels for the Nifty (with people quoting figures as low as 1200!!!). Now there is greater sanity in the market, and there is a suitable opposition to all the gloom-and-doom predicators.
S&P has been flirting with the 900 levels for whole of this week, and after breaking it, has come down again. If it breaks above 900 once more, a move towards 1000 is highly possible. However, if it fails to break it in in another week or so, then we may see the return of blood on the street.
Gold surprisingly has been going up even during this rally, and is currently at 925 levels. With all this bullishness, I would have expected gold to trade at sub-800 levels. So, there is a correction due in atleast one of the markets.
Credit markets have been improving, and JPM Emerging Market index is now at 500 levels. Still much above the pre-Lehman times, but this has improved considerably from its 800-levels seen in October'08.
My view on the Indian Market is that we may see this rally continue till 4000 levels. Unless something goes really wrong worldwide, we may see everything moving up. Elections, which have been the talk of the tinsel town over the past couple of months, may turn out to be a non-event. Either the NDA, or UPA could be making the parliament, and who amongst the two noone gives a damn.
EUR has surprisingly out-performed against USD, and has climbed to 1.35+ levels. However, I still believe its a ticking time-bomb, and might turn out to be very difficult to diffuse (unless the central banks round the world keep pumping liquidity into the system).
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