MARKETS WILL STAY IN 5050???

Market May Stay at 5050 level for some more days

The mood on Dalal Street has soured further after Standard & Poor’s cut the long-term US credit rating by one notch to AA-plus from toptier AAA. But investors have not pressed the panic button yet.

The rating downgrade, which came after the US market hours on Friday, capped a tumultuous week that saw around $2.5 trillion wiped off the value of global equities due to concerns over a US slowdown and the euro zone crisis. In India, investors lost `2,68,258 crore as key indices fell to their lowest levels in 14 months.

Experts believe S&P’s downgrade of the US credit rating will have a short-term impact on the Indian market, and global uncertainties may drag the Bombay Stock Exchange (BSE) benchmark Sensex another 5-7 per cent in the short term. The 30-stock index lost about 5per cent last week and ended at 17,305.87.

Everyone already knew the US is the largest debtor nation in history — except S&P and Moody’s,” influential investor Jim Rogers, chairman of Roger Holdings.He doesn’t expect the downgrade to have any impact on global financial markets and emerging markets like India.
As the downgrade was expected for almost a week, the market was prepared, experts said. Stock markets could go either way on Today. To the small extent the sell-off was on the rumour of a downgrade, rather than fears of slower growth, at least we have certainty. I do see the downgrade as bad news but not for the obvious reasons. To me, the rating agencies are inadvertently playing a pernicious role in worsening the global policy response to the private sector debt crisis.