global markets 17th Oct. 2008

global markets 17th Oct. 2008
Wall Street rallied finding momentum toward the end of a volatile session, as the lowest oil prices in more than a year gave investors a reason to scoop up shares battered in the recent market selloff.The Dow Jones industrial average (INDU) surged 401 points. The Standard & Poor's 500 (SPX) index rose 4.3% and the Nasdaq composite (COMP) gained 5.5%. Crude oil is at $72 a barrel and Gold is at $804 an ounce. European stocks ended steeply lower with banks leading the decline as global equities slid on investors' fears of a global recession, and oil shares tracked tumbling crude. Across Europe, Britain's FTSE 100 dropped 5.7 percent, Germany's DAX lost 4.9 percent and France's CAC shed 5.9 percent. Asian stocks rose on signs governments are succeeding in efforts to unlock credit markets. Japan’s Nikkei 225 is up by 1.5% and China’s SSE Composite is in the green by 0.1% but Hong Kong’s Hang Seng is in the red by 0.83%. Data about housing permits is expected from US today.

MARKET OUTLOOK
Stock markets have staged a strong comeback on lower crude oil prices and cooling inflation across the globe which will boost the purchasing power of consumers. Asian markets have rose on easing rates in money markets which has led to the expectation that the credit markets are on their way back to normalcy. The same is true of India as Call rates in India have fallen to 6.75% from a peak of nearly 23% last week. This is after RBI's injection of Rs.1,45,000 crore into the system through various measures. Inflation, another achilles heel of Indian economy is at 11.44% and this is the third consecutive weekly decline. All these should cause positive gap up opening in India. When global news flow subsides there will be more focus on domestic news and we are going to watch new political dramas from here onwards. For Sensex, Critical level is 10645 and above this the Resistance comes around at 10840.Only above this level market may show strength. Nifty has to cross 3335 for the momentum. Below 3195 the Nifty trend may reverse.