Pre-Market report on 14.03.2008

[K.Karthik Raja]

US markets rock steady ; Emerging markets not ready
Mar 14, 2008

Absolutely surprising by any standards, the way the US markets are
holding out. Global investment banks were taken a back by their
bearish views on the US economy given the solid strength display by
the wall street. Dow Jones, trading down by 200 points at one point
reversed its gains to end the day up by 35.50 points at 12,145.74 and
Nasdaq closed higher by nearly 20 points at 2,263. S&P said that we
might be at the end of the write-down period. Crude continued to flirt
with life time highs, today making love with USD 111 for some time to
end at USD 110.33 on NYMEX. Dollar continue to move lower while
Gold hits life time high USD 1000. We can term this as a period of
unusual times with Gold,Crude oil making new highs everyday and dollar
hitting new lows every day against major global currencies.

On the flip side the Emerging markets along with the European markets
are unable to hold their feet on the ground and overreacting to every
small negative news and neglecting any big news coming their way. The
scenario actually was exactly reverse few months back when US markets
used to react to subprime news Emerging markets used to hit new highs.
European markets are the scapegoats in both the scenarios.

The only difference to the above mentioned scenarios is the role of
market players in the Emerging markets. Few 100 million dollars can
turn the market either way. This is no big money for a global
investment bank. You can see the same pattern across the Asian markets
as it appears global investment banks have gone heavily short
especially in Japan, India and China (to certain extent). These
players go short in futures and taking advantage of the negative news
they beat the indices/stocks with no mercy.

US Markets is no cake walk for these market players mentioned above.
There is another herd of investment/trading entities called "Hedge
Funds" which can go to any extent in the direction they take. The
current trading pattern clearly indicates few big Hedge funds are long
in the US markets and giving it a hard time to the global investment
majors who are on the bears side. It is not an easy call to predict
the winners.

Indian markets are witnessing the opposite pattern due to lack of bull
grip on the indices, mutual funds waiting on the sidelines for further
dips, lack of retail participation, lack of favourable news flow and
definitely slow growth with increase in inflation.

There might not be many takers for the above mentioned view but taking
an insight to what happened in the last 6-8 months will clearly
indicate that the emerging markets are moving against the Big brother,
courtesy the players.

When will this end?

Though there is no specific time frame we expect the way the stocks
are falling we are nearing the bottom and we will not be surprised if
there is a big bang intraday rally on the lines of Dow Jones the other
day, which appears to be a mere dream given the situation. But
remember these kind of rallies come out from the blue.

Our View : Though the pattern indicates a mildly bearish view for the
Sensex and the Nifty we expect the markets to bounce back at least to
certain extent given the blood bath yesterday.

Market Close Box :

BSE Sensex 15357.35 -770.63
NSE Nifty 4623.60 -248.40
USD Rs.40.44
Oil Nymex $109.7

K.Karthik Raja
www.kences1.blogspot.com