What a manic week it has been! Global stock markets are struggling to find their feet as investors are fleeing to safe-havens as banks grapple with negative interest rates and the flattening of yield curves. A surprise decision by the Swedish central bank to lower its short-term rate to minus 0.50% from minus 0.35% has heightened fears that central bankers are now making things worse, not better. We had flagged off this risk in our Jan 29th edition as BoJ resorted to negative interest rate policy. Investors now see these rate cuts as smacking of desperation and the latest sign that global central bankers are moving towards an uglier bout of currency war driven by concerns about economic growth. Fed Chair Janet Yellen’s comment that options remained open for more rate hikes put further pressure on sentiments.

Market fall snapshot:

Continuing earnings weakness, disastrous PSU bank results and global risk off weighed on Indian markets with Sensex falling 6.6% in the last 5 trading sessions. Currently, ~84% stocks trade below their 200DMA – the last time we had a similar statistic was in Sep 2013 around the time Mr Modi was announced as the BJP’s PM candidate. Not surprisingly, none of the stocks within Auto, Banking, Capital goods and Realty sectors trade above their 200 DMA. However, 20% + stocks within FMCG and IT are stillabove their 200 DMA (refer page 2).

Going forward, as things settle down a bit, markets will take cues from the upcoming budget session of the Parliament.