Today, it looks like Friday the 13th may be unlucky for the bears with the short-term spurt set to continue for some time. Stocks in the US, Europe and elsewhere in the world rallied for a third consecutive day on Thursday. Asian markets are also back in the green. Nifty Futures contract trading in Singapore is up smartly as well. As a result, Indian stocks are bound to see another gap-up opening. If all goes well, we could end the week on a high.
Be warned that this could change suddenly as some cooling is not ruled out. Traders remain jittery about the precarious global situation and sluggish local economy.
Do not read too much into the short-term rebound as world equity indices were anyways pretty oversold. A technical bounce was always on the cards. The big question is whether this trend can sustain for long? The answer is sadly negative. For, earnings will continue to be subdued, even as inflation softens and interest rates head south. Also, the deteriorating fiscal situation will continue to hurt private financing besides worsening sentiment in financial markets.
Such short-term spurts shouldn’t lead one to believe that we are out of the woods. We remain in a bear market, and such rallies are only to be expected. A sustained recovery could be recovery unless stability in western financial system returns.
