The Indian markets made a late afternoon jump on Friday and the Sensex had the dubious and unconvincing distinction of ending the week on a positive note.
The real impact of subprime crisis on markets to emerge only by Nov, say analysts
MUMBAI: The volatile Indian markets made a late afternoon jump on Friday and the Sensex had the dubious and unconvincing distinction of ending the week on a positive note.
Dubious, as 260 of the 283 points gained over the week were made on Friday alone, and unconvincing because one wonders whether all the pain and volatility were worth all the effort of being in the market.
For the record, the Sensex ended at 14,424.87 points, a gain of 1.84% from its previous close.
Making the gains even more suspicious is the performance of India vis-à-vis other global markets.
The Sensex has recovered just 24% of the cumulative 1,805 points it lost in the market meltdown that started in late July, while benchmark indices in other important markets like the US, the UK and Brazil have recovered as much as 33%, 43% and 37.9%, respectively.
Even Asian neighbours such as South Korea, Singapore and Indonesia have done better than India.
Then, why all this talk about India being better poised to make a comeback?
“This just shows that our markets are as vulnerable to domestic issues as they are to foreign ones,” said Shankar Char, vice-president of Centrum Broking, referring to the political impasse between the Congress-led United Progressive Alliance at the Centre and the Left parties.
“The markets don’t like uncertainty, whether political or otherwise, and they’ve reacted accordingly,” adds Tarun Sisodia, head of research at Anand Rathi Securities.
However, he does not call any of the heroics or efforts by global markets to move up in the past few days as ‘recovery’.
“The sub-prime market will continue to deteriorate, and till November, the overall global market is going to be in a bearish phase,” he said. So, if at all there is a recovery, it can happen then.
“At that time, India will definitely be the first country to really bounce back,” he adds.
A comforting opinion about the near future comes from Alroy Lobo, chief strategist and global head of equities at Kotak Asset Management. “Hedge fund redemptions and their pulling out money from markets is only the first order of things. I would say these are great opportunities to buy,” he said.
“But if the situation deteriorates into the second order, where global financial institutions start going bust and the US gets into a recession, then we’re in for trouble. This can be known only when global institutions start reporting their third quarter numbers,” he added.
So what lies in store? Uncertainty on domestic and global issues and market volatility. That’s the straight answer.
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