To be (bullish) or not to be – is the question!

Commodities Traders amongst you would have got decent and quick returns in NAT GAS. Well the Equity markets were not so hyper active. While on week-to week basis they are showing a gain of more than 3%, many stocks are witnessing profit booking.

The World markets are acting as if World GDP is going to gallop in the next few months !! Let's see what's happening in the world financial markets:

One of the major news as far as the world markets is concerned was that last week GOLD crossed the psychological $1000. This is an interesting phenomenon.

All of the world’s financial markets are rising – Gold, Crude, Base Metals, Stocks, Agro Commodities and also most currencies (against the dollar). Historically there has been a inverse relationship between many of these ‘asset classes’- for instance when stocks fall, Gold rises or say when Crude oil rises, the stocks fall.

But these logical relationships seem no longer valid. Is this a temporary phenomenon? Will the inverse relationship restore in coming days? Time will tell.

But one thing seems pretty sure – all the financial markets are rising mainly on account of the huge liquidity in terms of huge stimulus packages given. And most of this stimulus is ‘financed’ by China!

This may be the reason that the Bank of China gave a statement that ‘there is a bubble in stocks and commodities, not only in China but everywhere’. And if this bubble were to burst , it will be a huge blow to the ‘signs of recovery’ which is being promoted by governments the world over.

While previous few weeks saw the US markets outperforming the Asian markets, last week it was the turn of Asian markets to outperform – (another indication of rotation of money?).



Indian markets are treading cautiously... Investors too must do the same - be extremely careful! 4700 Nifty should be the Crucial support below which traders and investors should exit all longs !

Take Care !

CA Rajiv D Khatlawala