What will this week hold for Indian equities, after the new lows of last week?
News from Europe will have a major impact; as yet, these are still rumours, but it seems that the IMF is preparing a fund to bail out Italy, via the ECB. This would seem unfair if it didn't include Spain; in turn that should require funding for a total of 14 countries where bond yields have spiked. Till the rumours find a concrete expression in reality, one way or the other, expect some risk-positive behaviour, meaning higher prices for equities.
This would also mean higher prices for gold, as greater monetisation takes place in the Euro zone. If this leads to higher crude oil prices, the fate of the Indian rupee remains questionable, and it may not find much support.
From the U.S., strong retail sales on Friday, the beginning of the holiday shopping season, will also prompt higher equity prices, which would reinforce crude and gold.
In India, our Finance Minister's demand for more funding of government expenditure is going to put the cat among the pigeons, and pressure bond prices. While the Reserve Bank of India (RBI) has been playing along, by buying bonds from the market, it knows this will pump extra cash into the system, with the consequent impact on prices.
News from abroad, in other words, may help lift Indian equities, but the more important influences will be domestic. The best bet this week, in my view, will be gold.
News from Europe will have a major impact; as yet, these are still rumours, but it seems that the IMF is preparing a fund to bail out Italy, via the ECB. This would seem unfair if it didn't include Spain; in turn that should require funding for a total of 14 countries where bond yields have spiked. Till the rumours find a concrete expression in reality, one way or the other, expect some risk-positive behaviour, meaning higher prices for equities.
This would also mean higher prices for gold, as greater monetisation takes place in the Euro zone. If this leads to higher crude oil prices, the fate of the Indian rupee remains questionable, and it may not find much support.
From the U.S., strong retail sales on Friday, the beginning of the holiday shopping season, will also prompt higher equity prices, which would reinforce crude and gold.
In India, our Finance Minister's demand for more funding of government expenditure is going to put the cat among the pigeons, and pressure bond prices. While the Reserve Bank of India (RBI) has been playing along, by buying bonds from the market, it knows this will pump extra cash into the system, with the consequent impact on prices.
News from abroad, in other words, may help lift Indian equities, but the more important influences will be domestic. The best bet this week, in my view, will be gold.
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