I was wondering why an expiry day was so dull. It was as I was contemplating - a lull before the storm. Bulls were being made to climb up the gum tree. It was a perfect setting for a Bull Trap. Well done Bears!.
That said, I am not fully convinced that the gruesome sell off had anything to do with GDP numbers as is being publicized. GDP numbers were in fact a tad better than market expectations. And if expected GDP numbers did not rattle the markets yesterday, then why the sell off today. It doesn't stand to reason. The combination of following can be the reason for such determined sell off:-
- RBI Governor hinted that rate cut is not likely. And since this rally was June rate cut driven, hence the sell off today.
- PM hints at cabinet reshuffle, so an air of uncertainty hangs in air. And markets loathe uncertainty.
- The relentless slide in Rupee against Dollar, indicating that tapering of QE-3 in US is on the cards. This will result in tightening of liquidity in markets for all asset classes.
I am planning to run a series through this blog on all profitable Indian industries that Govt has succeeded in butchering through its quaint policies. God knows what sadistic pleasure is being derived by the GovtOthrough such policies. We shall evaluate later, so keep checking out this space.