Daily call - Oct 15 2008

Indian Investors are going to wake up to a languorous morning, to find the International markets in a mild retreat, something that resembles gentle profit taking and one which could be considered as bullish. However, with the major announcements in Europe on Monday morning and in the US on Tuesday, the good news has run its course. Now it is the time for some reality check.



The three-month dollar Libor, a measure of the rate banks charge one another for large loans, declined 12 basis points to 4.64%. It is sign that the ice is thawing. This small retreat in the rate, however, is not proportionate to the magnitude of good news that has come in for the banking space. While it may thaw a little more, it is unlikely to come down to market’s comfort level before the October 21 Lehman CDS pay out happens uneventfully. Unlike Monday, positions were curtailed Tuesday, which is healthy. Hope for a mild correction and take a neutral attitude to things after 200 points have been shaved from yesterday’s close in the Sensex.