Markets in a minute

Increasing jitters about the health of the global economy, panic-stricken markets, the free fall in the rupee, and many other twists and turns on the bourses kept the Studio buzzing. Here's some of what we heard.

Vikram : The markets seem to be in capitulation mode. The 704-point drop in the Sensex on Thursday followed by the 199-point slide on Friday has planted fear and doubt even among die-hard bulls.

Aditi : You bet. Many think its going be a long haul before markets stabilise. The US and Europe may be staring at a recession, the Chinese juggernaut is showing signs of slowing, and our battle with inflation is far from over. The latest advance tax collection numbers too have been lacklustre.

Vikram : Troubles hunt in packs. And nothing which the powers-that-be say or do seems to calm frayed nerves. The latest ‘Operation Twist' of the US Fed was followed by sell-offs across markets. “Significant downside risks to the economic outlook”, as the Fed put it, may have got the market's goat.

Aditi : With the world and its uncle rushing towards the exit door, the demand for ‘safe haven' investments is in high fashion again. And guess who is benefitting? The US dollar. Counter-intuitive as it seems, the greenback is on a roll and has gained strongly against many currencies including the rupee.

Vikram : I guess the TINA (there is no alternative) factor is at play here. Gold, the original safe haven, may already have run up too fast and furious for comfort, the Euro is in shambles, and many money mavens are wary of placing their bets on the Chinese renminbi.

Aditi : Hmmm…it could also be that when the going gets tough, the tough yield to the ‘homing instinct'. With a good chunk of global money originating from the US shores, the return back to the dollar seems plausible.

Vikram : Whatever the reason, this has spelt bad news for the rupee, which has tumbled thick and fast against the dollar. It's fallen almost 10 per cent since January, and is presently close to levels of 50 per dollar.

Aditi : This spells bad news for our importers, including oil-refiners who have to shell out more for imported crude oil. Also, the RBI's war on inflation may just get tougher with costlier imports. The saving grace is the recent cooling-off in commodity prices, thanks to fears of a global slowdown.

Vikram : It's a tug-of-war. Exporters, though, may have some reason to smile, though they too run the risk of shrinking demand if major economies fall into recession.

Aditi : In the midst of all the macro-economic brouhaha, there was also heavy stock-specific action in the markets. The beleaguered Everonn Education, for instance, gained more than 20 per cent, with the Dubai-based Varkey Group picking stake.

Vikram : And unsurprisingly, there were big losers as well. The troubles for Reliance Industries don't seem to end. Along with the market woes, news of the Oil Ministry planning to penalise the company for lower-than-expected gas production saw the stock shed 7 per cent over the week.

Aditi : Win some, lose some — that's the name of the market game. Hope it's more of the former than the latter next week.