On Monday equity markets allover the world went on a downward spree. This avalanche in the markets was triggered by over 9% rout in the Chinese markets. Chinese markets plummeted owing to the fears of the economic slowdown despite the devaluation of Renminbi. The devaluation of Yuan, officially the Renminbi, led to speculation that the economy is slowing, and this slowdown has led to the devaluation of Yuan to contain this slowdown by increasing exports.But, it seems as though China is on a unmanageable slow down trajectory.And similar fears among the investors has led to an increase in the volatility of the markets.
Tremors of the global equities sell-off were felt in the currency markets, bullion markets, and energy markets.The Rupee hit 66.60 against the US dollar on Monday. The rupee, however, gained 54 paisa to close at 65.87 on Tuesday, as the Chinese central bank cut the interest rates by 0.25 percentage points and the reserve requirement ratio by 0.50 percentage points.Gold prices increased with the rise in fear over the volatility in the global markets while the oil prices continue to be decreasing amidst supply glut.
As far as India is concerned, both the Sensex and Nifty took a beating on Monday but have regained some of their losses in trading on Tuesday.Indian economy though vulnerable to the global changes, especially those in China, is comparatively more robust than other economies due to a variety of factors.First,inflation rate is under control and moderate; second,current account deficit(CAD) is low; third,fiscal deficit is manageable; fourth,growth is still good compared to other major economies; and with positive investor sentiments over increase in the infrastructure spending and most probably the passage of bills like GST.An expected untimely rate cut by RBI is also a major factor which is keeping the market sentiment in high spirits.
Experts have opined that the volatility in the markets will continue mainly due to decreasing manufacturing growth rate in China.The stocks continue to plummet wiping billions from Chinese equity market, amidst the efforts by the Chinese government to contain the losses ,showing that the government efforts have not had the desired effect. What remains to be seen is that will China be able to curtail this downward spiral?
Tremors of the global equities sell-off were felt in the currency markets, bullion markets, and energy markets.The Rupee hit 66.60 against the US dollar on Monday. The rupee, however, gained 54 paisa to close at 65.87 on Tuesday, as the Chinese central bank cut the interest rates by 0.25 percentage points and the reserve requirement ratio by 0.50 percentage points.Gold prices increased with the rise in fear over the volatility in the global markets while the oil prices continue to be decreasing amidst supply glut.
As far as India is concerned, both the Sensex and Nifty took a beating on Monday but have regained some of their losses in trading on Tuesday.Indian economy though vulnerable to the global changes, especially those in China, is comparatively more robust than other economies due to a variety of factors.First,inflation rate is under control and moderate; second,current account deficit(CAD) is low; third,fiscal deficit is manageable; fourth,growth is still good compared to other major economies; and with positive investor sentiments over increase in the infrastructure spending and most probably the passage of bills like GST.An expected untimely rate cut by RBI is also a major factor which is keeping the market sentiment in high spirits.
Experts have opined that the volatility in the markets will continue mainly due to decreasing manufacturing growth rate in China.The stocks continue to plummet wiping billions from Chinese equity market, amidst the efforts by the Chinese government to contain the losses ,showing that the government efforts have not had the desired effect. What remains to be seen is that will China be able to curtail this downward spiral?
