Sensex response to Federal Reserve's rate cut and Christmas.

saurabhpatil · #1 9th December 2007, 04:54 PM

Hello friends,

The first affecting factor is Fed dutting the interest rates. After reading a couple of articles I think there is a strong feeling that Federal Reserve is going to cut the interest rates. Now the question is by how much and its hard to make any predictions.

The second factor is Chirstmas which is just 13 days away.

The third factor is the 2007 year end.

These 3 factors will primarily affect the journey of sensex in remaining december and jan2008. Although 1st factor is very strong to bring inflows from foreign investors, the next two factors can be responsible for the heavy selling from FII's resulting into a great fall in SENSEX.

What are your predictions on the movements of SENSEX in Dec 2007 and Jan2008?

- $aurabh Patil

Sunny · #2 10th December 2007, 07:34 AM

Quote:

Originally Posted by saurabhpatil

Hello friends,

The first affecting factor is Fed cutting the interest rates. After reading a couple of articles I think there is a strong feeling that Federal Reserve is going to cut the interest rates. Now the question is by how much and its hard to make any predictions.

The second factor is Christmas which is just 13 days away.

The third factor is the 2007 year end.

These 3 factors will primarily affect the journey of sensex in remaining December and jan2008. Although 1st factor is very strong to bring inflows from foreign investors, the next two factors can be responsible for the heavy selling from FII's resulting into a great fall in SENSEX.

What are your predictions on the movements of SENSEX in Dec 2007 and Jan2008?

- $aurabh Patil

Anurab,

For me first two factors are going to be crucial. If there is a Fed cutting in the interest rates, before christmas, it would affect inflow.

as such in Christmas and new year end, much of inflows is not expected before, mid Jan. and fed cut might ensure few those willing to will also not.

Keeping an eye over the same...

saurabhpatil · #3 10th December 2007, 11:00 AM

the first factor can be responsible for inflows and next two for outflow. I think market will go up tommorrow, and mainly banking stocks. Its just my opinion.

rookie_gau · #4 15th February 2008, 07:29 AM

January fall was historic since for the first time FED cut did nothing to help the sentiment.

But now the markets are slowly recovering. This news fromm CNN might help

CNN

Alchemist · #5 15th February 2008, 07:51 AM

Quote:

Originally Posted by rookie_gau

January fall was historic since for the first time FED cut did nothing to help the sentiment.

But now the markets are slowly recovering. This news fromm CNN might help

CNN

Even if it expects a recession, the government will downplay the risk. Recessionary fears/statements are enough to send an economy into recession and thus governments will always paint a better picture than reality.

-0.2% growth is recession.
0.2% growth is not recession.

The fact is:

there is not much difference between -0.2% and 0.2%.

The overall US economic scenario is pretty bad right now and no one should take for granted that recession will not come.

rookie_gau · #6 15th February 2008, 03:38 PM

There is no question as to whether the recession is coming or not. Its just the question of time.

Whatever happens, India and the world is going to be affected by it. People talk of India and China having opposite trend.

I personally think India has not matured enough to decouple itself from US. Even China will need time to do that, when US recession gets confirmed.

Alchemist · #7 15th February 2008, 07:07 PM

Quote:

Originally Posted by rookie_gau

I personally think India has not matured enough to decouple itself from US. Even China will need time to do that, when US recession gets confirmed.

India can still move on unaffected by US slowdown, but I feel the biggest problem is inflation.

If it weren't for inflation, India could have had the luxury to lower interest and accelerate the economy again.

Energy and food prices are refusing to come down.

In an ideal scenario, a slowing world economy would have meant lower prices for energy resources.

However this is not happening.

Crude oil and coal prices are still very firm.

Food is for human consumption and I do not have much hope of food prices going down even if US goes into a recession.

If the RBI lowers interest rates too much or too fast, inflation may go out of control.