BAD DAY FOR MARKETS AND SAD DAY FOR INDIA
By Ruma Dubey
India’s performance at the World Cup was disappointing to say the least. The fall of four wickets within a short span of time, that too before scoring 100 runs really dampened the moods. And to ‘distract’ oneself, if you had switched to the business channels, you might have wondered when this day would finally come to an end!
As Indian wickets fell fast and furious, the markets crashed too. At 3.15pm, it was down some 700 points but at the last moment it recouped a bit though it ended with a resounding thud – down 654 points. As it became more and more evident that India was getting out of the World Cup, instead of trying to discern why India lost, we thought it would be much better to focus all our energies on trying to learn why our markets fell.
The prime reason is the F&O expiry, combined with some geo-political factors. The March F&O series is ending and next week, the first week of April, markets are closed for a long time. 1st April is not a market holiday but banks are closed for fiscal ending so as much momentum is expected to be low. Then there is a holiday on 2nd and 3rd April followed by the weekend. Thus next whole week is almost out and with March F&O expiry this week, traders do not want to take any risks by keeping any positions open.
This worry has come in following the tensions in Yemen. Saudi Arabia led coalition of Arab nations against Yemen’s Houthi rebels has led to a surge in crude oil prices. At this juncture, things look very liquid on the Middle East front and foreign investors do not want to take any risks. Plus there is the worry about how long this situation would precipitate, leading to more surge in crude prices.
Following this news, there has been a sell-off in the global markets too. Markets all over have ended in the red today and this too has played negatively on the sentiments. Many even go on to blame this fall on the BJP Govt not being able to pass important Bills and it will have to wait for 20th April to come for the new session to begin. But this might not be a reason for today’s fall as the market had already factored in this and knew all along that it would be tough. But yes, if Bills do not get through in the April session, surely domestic factors will come to the forefront.
For now, the markets will wait for new triggers – first being the RBI Policy on 7th April; it would be foolish to expect a rate cut but that’s how markets are – hopes for the impossible. Then the result season will begin and there too, one does not expect record breaking performances, instead, it could be a worrisome Q4. News on the rains front could be a dampener and we could see inflation surging in the coming months.
Thus if we have a few triggers, none of them look all that great. Markets will have to look internally and hope that the Modi Govt walks the talk. Keep a watch on crude too.
Well, it’s been a bad day for the markets and a sad day for India. But then this too shall pass…life goes on.