No Celebration for Market

Monday started on a positive note as central banks moved to ease a credit crunch. The European Central Bank pumped in billions of dollars to the monetary system. The Bank of Japan also did so. The Fed too injected billions in reserves to the nation's banking system. Subsequently, European shares posted a substantial gain as investors took heart from central banks' moves to calm money markets. In India too, the market closed in positive territory.

But since that day, the market fell all through the week. Not only was that evident in the main indices but even in the BSE sectoral indices. Tuesday the market closed flat but there was blood on the street on Thursday. The US sub-prime mortgage worry continued to haunt global markets after reports that the biggest mortgage lender in the US was on the brink of bankruptcy. The next day the slump continued. Of course, we also had to contend with relations between the Left parties and the Congress-led government going sour.

Nevertheless, though the situation will remain volatile and even negative in the short-run, the long-term outlook is fairly positive with inflation under control, the general perception of interest rates peaking and fairly robust quarterly results. In the short-term, global liquidity supply will affect the market. Brokers went on record saying that they don't think the Sensex will fall to below 13000 to 14000.