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Mr. Market and his troubles

The meltdown notwithstanding, experts are divided on which way the market is headed 

Source: Ace Equity

“We were wronged.” This remark comes from a senior official of Central Bank of China after the surprise devaluation of the yuan ended up wiping off $5 trillion off global stock markets in August. In defence of the central bank action, Yao Yudong, head of the bank's Research Institute of Finance and Banking, was quoted by Reuters as saying:"China's exchange rate reform had nothing to do with the global stock market volatility, it was mainly due to the upcoming US Federal Reserve monetary policy move.”

While the Chinese clearly don’t want to be blamed for the market crisis, there is no denying that problems emanating from China could keep global markets, including India, under pressure.

Besides external factors, conditions closer home are far from encouraging. Fresh government data on August 31 revealed that domestic growth had slowed down to 7% in the June quarter from 7.5% in the previous quarter. Not surprising that the Sensex is already down 800 points in the first two trading sessions of September. This is after the benchmark gauge plunged 6.5% in August, the most since November 2011, as foreign institutional investors dumped equities worth $2.5 billion.

More pain in store…

Interestingly, amid the gloom and doom mood on the street, there is a diverse opinion creeping in on how bad things could get on from here.

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