The stock markets have been volatile over the last few days. They are in a sideways movement and trying to find the bottom after a fall of 20 percent a week ago. The market sentiments are not very positive at the moment and the recent developments are expected to dampen them further. Globally, governments and central banks are trying to cut rates and announce packages to improve business sentiments.
These are some of the major developments in the markets last few month:
A) Global
On the global front, another large US bank went into a financial crisis. The US government took quick measures to avoid the spread negative sentiments in the markets. The US government announced a bail-out package and agreed to shoulder the losses on the bank's risky assets.
China announced a large cut in interest rates and reserve ratio to boost the investor sentiments in the markets. Recently, the World Bank announced China's growth rate next year will come down to 7.5 percent. The European Union is also considering a large package to bring cheer to the business environment and investor sentiments.
The scenario worldwide is still looking quite gloomy as more bad news is coming in from large financial and industry houses. People looking at investing in the stock markets should remain extremely cautious and closely track the market developments. Investors with a low risk appetite, and inadequate exposure and understanding of the market dynamics should stay away from direct exposure to stocks at this moment.
B) Crude oil price drops
Crude oil prices are quoting in the range of USD 48 to 55 in the last few days due to lower demand in the global markets. The import crude basket of domestic oil marketing companies also has come down drastically. The oil ministry and government are considering a rate cut on petroleum products (mainly petrol and diesel).
The rate cut will result in a lowering of prices of commodities, and will reduce the inflation rate further. Analysts are expecting inflation to go below five percent by March 2009 due to the slowdown in the global markets, a sharp decline in crude oil prices, and the inflation base effect.
C) Currency
The rupee again depreciated vis-a-vis the US dollar. It was at its lowest level in the year, trading at around Rs 50 per USD. The rupee depreciation is not good from the perspective of the economy, as it results in imports getting expensive and increases the current account deficit.
These are some of the major developments in the markets last few month:
A) Global
On the global front, another large US bank went into a financial crisis. The US government took quick measures to avoid the spread negative sentiments in the markets. The US government announced a bail-out package and agreed to shoulder the losses on the bank's risky assets.
China announced a large cut in interest rates and reserve ratio to boost the investor sentiments in the markets. Recently, the World Bank announced China's growth rate next year will come down to 7.5 percent. The European Union is also considering a large package to bring cheer to the business environment and investor sentiments.
The scenario worldwide is still looking quite gloomy as more bad news is coming in from large financial and industry houses. People looking at investing in the stock markets should remain extremely cautious and closely track the market developments. Investors with a low risk appetite, and inadequate exposure and understanding of the market dynamics should stay away from direct exposure to stocks at this moment.
B) Crude oil price drops
Crude oil prices are quoting in the range of USD 48 to 55 in the last few days due to lower demand in the global markets. The import crude basket of domestic oil marketing companies also has come down drastically. The oil ministry and government are considering a rate cut on petroleum products (mainly petrol and diesel).
The rate cut will result in a lowering of prices of commodities, and will reduce the inflation rate further. Analysts are expecting inflation to go below five percent by March 2009 due to the slowdown in the global markets, a sharp decline in crude oil prices, and the inflation base effect.
C) Currency
The rupee again depreciated vis-a-vis the US dollar. It was at its lowest level in the year, trading at around Rs 50 per USD. The rupee depreciation is not good from the perspective of the economy, as it results in imports getting expensive and increases the current account deficit.
