So..Finally left withdraws support from the UPA govt after long drama over nuclear deal.
Does it really affect market ?
Answer to this question lies in the fact that market recovered after the news formally came out today afternoon. Market never like uncertainty and in a way it is good with the general election due next year march, so it hardly matter whether elections happen 3-4 months before scheduled time. We believe markets have already discounted the news.
Right now there are far greater issues before the market - earnings slowdown, high oil prices, rising inflation.
Although market valuations have down from the peak in January this year and now trades at PE multiples of 14 (Sensex EPS - 950).
Can the market go lower from these levels ?
In the near term it seems market has formed some strong support near recent lows of 3830-3850 (Nifty) but another rally in oil prices or further spurt in inflation can break all these support very easily and nifty could slide to further lower levels (In general 1 pt change in nifty results in 3 pt change in sensex, although there is no written rule).
Oil has cooled off today to US$ 136.7 from its recent highs of US$ 145.85 per barrel on July 3. Along with oil prices of many commodities has cooled off from there highs. With slowing economies across the world and resulting slowdown in demand the prices of many commodities are bound to come down including oil. But if there is any new geopolitical development such as Israel attacking Iran price of oil might flare up.
Slowing economies coupled with high inflation (Stagflation) beyond the comfortable range is giving headache to most central bankers across the world. ECB recently raised the interest rates by 25 bps to counter inflation in the Euro zone and situation is same across the world. In India inflation is expected to rise off further before high base effect of last year kicking in.
From this friday extremely important earnings season will start with Infosys declaring the result. If there is any nasty surprise from the companies than it is no-brainer market will go down significantly lower from here.
Does it really affect market ?
Answer to this question lies in the fact that market recovered after the news formally came out today afternoon. Market never like uncertainty and in a way it is good with the general election due next year march, so it hardly matter whether elections happen 3-4 months before scheduled time. We believe markets have already discounted the news.
Right now there are far greater issues before the market - earnings slowdown, high oil prices, rising inflation.
Although market valuations have down from the peak in January this year and now trades at PE multiples of 14 (Sensex EPS - 950).
Can the market go lower from these levels ?
In the near term it seems market has formed some strong support near recent lows of 3830-3850 (Nifty) but another rally in oil prices or further spurt in inflation can break all these support very easily and nifty could slide to further lower levels (In general 1 pt change in nifty results in 3 pt change in sensex, although there is no written rule).
Oil has cooled off today to US$ 136.7 from its recent highs of US$ 145.85 per barrel on July 3. Along with oil prices of many commodities has cooled off from there highs. With slowing economies across the world and resulting slowdown in demand the prices of many commodities are bound to come down including oil. But if there is any new geopolitical development such as Israel attacking Iran price of oil might flare up.
Slowing economies coupled with high inflation (Stagflation) beyond the comfortable range is giving headache to most central bankers across the world. ECB recently raised the interest rates by 25 bps to counter inflation in the Euro zone and situation is same across the world. In India inflation is expected to rise off further before high base effect of last year kicking in.
From this friday extremely important earnings season will start with Infosys declaring the result. If there is any nasty surprise from the companies than it is no-brainer market will go down significantly lower from here.
2 comments:
1 Point NSE = approx. 3 Points on BSE that was cool ........
Is there any specific reason for this? why only 1:3 and not 1:7 ??
As I said baba thr is no written rule or something like that. Also thr is no specific reason of my statement. I said out of my observation of the market.
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