Today, we expect some softening after last week’s stellar gains. The bulls and most investors may been happy with last week’s gains. For the month, US stock indices (except Nasdaq) had their worst January on record, with the Dow losing 8.8%. Back home though, the Sensex and the Nifty fell by 2-3% in January. Still, one should not allow complacency to set in, as the outlook remains bleak. Much of the fears, relating to the health of the western financial systems and its global ramifications are still in place. A raging debate is underway on whether a bad bank be created to take toxic debt from troubled banks. While US President Barack Obama seems to be in favour of the plan, others like Joseph Stiglitz bag to differ.
Obama’s much-hyped new stimulus is also facing stiff opposition from Republicans. Senate will take up the bill this week.Global markets will be on edge this week ahead of monthly US jobs data. No big events are due in India for the time being. Politics will dominate headlines over the next few months.Markets might drift lower in the coming week with the US economy contracting at the fastest pace in nearly three decades in the fourth quarter of last year sentiments continue to remain weak.
