There’s a remarkable lifting of mood in the world’s investment markets. A week ago, this was part of the G20’s achievements spin, some good Data releases by US but that connection has been stretched as far as it goes. Just as the markets were unwilling to ignore any bit if bad news till some time back, they are now willing to ignore all bad news and look only on the brighter side.
China's GDP at almost 2 decades low, UBS reporting over $1.5 bn loss and laying of 8000 employees, Infoys posting poor results along with even dismal guidance... But the markets are closing higher and higher...
The basics of this theory are simple—a huge amount of liquidity is being poured into the global monetary system and sooner or later, some of it is going to find its way into Indian assets and it has. So the bubble is being built up. The realisation that from now on the stock prices will only head in one direction and that is up is slowly setting in.
CNBC have started asking questions that is it a bear market rally or a beginning of the next bull market...? Hence I believe that slowly this bubble will burst leaving behind even more pain as the retail investors are euphemestically joining this bandwagon..
Thus the best strategy should be to cover the longs or build fresh short positions but not to gape at the index levels believing it to go high and be folled again by the institutions.
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