Click to play videoMumbai: Indian markets are fighting back the nightmare on Wall street. On Tuesday, it was a very interesting day in the Indian share market despite the gloom and doom in the US market. Markets in India recovered at the close.
After Lehman Brothers, America's biggest insurance company AIG is grappling for life. There are worries that this might affect the Indian banks.
The Rupee is even weaker. It is almost at 47 to the dollar. Crude has slipped to $90 US a barrel which is a further two per cent fall, as diminishing demand for oil has hit the markets.
Network 18's Stocks Editor, Udayan Mukherjee spoke on what made the Indian markets recover today.
"I think it was oversold and a little bit of an u-turn was always going to come. You had lost about eight per cent in two days flat and the market did appear a bit oversold. To put it in perspective, we've lost about 15 per cent in six sessions of trade. That is a dramatic fall and after these kind of linear falls, we do tend to get these bounce backs. So it is too early to say that we can start celebrating because the global markets are indeed very volatile. But today there was an expectation that the Fed might do something later tonight in the US and that might spark off a little bit of a recovery in the global markets which in turn are very oversold. That perhaps was the expectation on the back of which our markets moved up a bit.I wouldn't read too much into it. But if there is a certain bit of pull back possible, it certainly appears to be the case, particularly the global markets do give us some help, led by the Fed over the next couple of days," said Mukherjee.
So is the worst over as yet?
"Not only do I not know it, I do not think anybody in the world can put his hand on his heart and say that the worst is over in the US. You have enough names doing the rounds with AIG, UPS and heaven knows what else. A few weeks back when the Bear Stearns episode happened a lot of us felt that that was the end. And then we had Fannie and Freddie. That got bailed out and then we though that might be the turning point in global markets. Then came Lehman Brothers followed by Merrill Lynch and now we hear AIG. So none of us have any clue really about what is going on in the US and who will fall next. So this thing will be totally surmised on our part. The only thing that one can say is that when these episodes are reported in the open, then uncertainty gets taken out for the near term and therefore some kind of panic bottoms do get formed. From those, you do get a little bit of a bounce back. Then the feeling that we have put the worst behind us lasts for a few days, weeks or months depending on how lucky you get. And then another skeleton tumbles out of the closet. The US financial sector is a mess."
Mukherjee also expressed that the Sensex conquering the 21,000 mark is an event that won't be repeated for at least another two to three years.
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