Arjuna Mahendran, HSBC Private Bank Views on global market
It is good to read other experts views as one gets a perspective from a larger audience and get information which a particular individual may be in possession.
It s just too early in terms of the news flow because yesterday we saw a pretty savage sell-off in the European bond markets which particularly affected some of the larger countries like France which thus far have been kept out of the fray. French spreads widening as they have overnight to closing upon the 200 bps above German bunds spread is of great concern because this then spreads the contagion to Europe’s second largest country and now its becoming systemic, its not just Italy any longer. All this is pushing even the equity markets particularly emerging markets like in India into risk aversion mode once more similar to what we saw in August and September and we are seeing a revamp of those events. I wouldn’t be surprised if some of the capital is flowing out of India right now. India has underperformed the other BRICs. Brazil, Russia, China equities have held up better than Indian equities in the last two-three weeks. This suggests to me that there are balance of payments issues in India, the slow divestment of privatisation proceeds and high inflation which is making India stand out slightly adversely compared to the other BRICs and emerging markets.
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