Monday 13 May 2013

may 13, 2013

The market tanked nearly 2 % today Sensex @ 19670 (down 450) and Nifty 5980 (down 126) .

Most global markets also lost around 1% . Apparent trigger for the fall was the talk by the FEDs  of not buying further bonds from the market - some kind of method to unwind QE without spooking the market.

The remarks by Ben Bernake last week that there are signs of excessive risk taking - affecting the asset prices and their relationship with fundamentals - is being seen by the market as an indication that the Feds are keen are exit from the stimulus (the $ 80 + billion a month on bond buying).

This is definitely a bad news for Indian market - the massive FII inflow has helped the government to fund the record CAD. So any sudden stop to such inflows would mean a bit of anxious moments in tackling the CAD situation.

The markets seem to recognise this problem
Or is it just the profit booking after a continuous run up to 20K from 18k.

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