**
**
*GLOBAL FACTORS TRIGGER CORRECTIONS :*
Over the last few days, the markets across the world went through some
profit booking and correction. The domestic markets were among the worst
performers during this correction phase as they fell by almost 10 percent
from their peak levels during the last few trading sessions.
The correction in the domestic markets was triggered mainly by global cues,
fears of the Reserve Bank of India (RBI) tightening the monetary policy in
its upcoming quarterly review, temporary restrictions in lending in China,
and lower than-expected results from some blue-chip companies here.
Analysts believe a correction was due as the markets have run-up quite a bit
in the last few weeks, and it is a good opportunity for long term investors
to invest in equity and equity-based instruments.
In general, small-cap and mid-cap stocks were heavier losers, than their
large-cap peers, during this correction, as they gained quite sharply during
the market rally. Investors should avoid investing in small-cap stocks and
remain cautious while investing in lesser-known mid-cap stocks.
*These are some significant developments of last week and are expected to
drive the markets in the coming days:
**US economy recovering *
In the US, the markets remained range-bound and a bit volatile last week.
The results of some blue-chip companies and the Federal Reserve's statement
that the economy showed further signs of improvement lifted sentiments in
the US markets, but the uncertainty on the political front and the
lower-than-expected fall in jobless claim kept investors nervous.
Slowly, more data points that confirm a recovery in the US economy are
emerging, but the pace of the recovery is slow. The markets are waiting for
some strong triggers to break the current trading range decisively in either
direction.
*Foreign investors off-load in emerging markets *
The US government is looking at putting some restrictions on banks regarding
their trading and investment placements. The cautious banks are looking at
recalling their funds from global and hedge funds. Analysts believe that
some of these funds have pulled out their money from emerging markets
including India during the last few days.
Investors should track the political development around this point to get a
sense of the market direction. The markets are finding strong support at the
lower levels but any policy action around this issue could lead to further
weakness in the domestic markets, at least in the short term.
*UK out of recession *
The UK reported a 0.1 percent growth in its economy during the last quarter
of 2009. The growth has been reported after six consecutive quarters of
negative growth. However, many analysts say investors should be cautious.
The reported growth is a very small fraction of a percentage and the picture
on the ground has not changed much. The job market in the UK is still quite
strained as companies are cutting jobs. The conditions, especially fund
raising, for the local businesses, are still quite tough.
*Dollar Value *
There is speculation in the currency market that China is looking at slowing
down its lending, and hence may put some cap on its growth.
These sentiments have resulted in a further strengthening of the US dollar
against the major world currencies. This also put pressure on the prices of
commodities and metals in the international markets. The prices of gold,
crude oil and metals have corrected significantly over the last few weeks.
Analysts believe the weakness in the commodity markets will persist for some
more time, until some clarity emerges around this as well as some other
ongoing European issues. Investors should remain careful before committing
fresh investments in the commodity markets.
**
**
*Best regards*
*Ashok Samtani*
***Business Manager*
*IB No. 82AS168/E82AS168*
*
Tel : (852) 62717893 / (86) 13530911867
E-Mail : ashoksamt...@gmail.com
MSN : ashok.empe...@live.com
*
*Emperor Financial Services Group*
*Emperor Bullion Investements (Asia) Ltd.*
***23/F., Emperor Group Centre,*
*288, Hennessy Road. Wanchai. *
*Hong Kong.*
*www.egoldsilver.com* <http://www.egoldsilver.com/>
*www.emperorforex.com* <http://www.emperorforex.com/>
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