Jan. 31: Unrest in the land of the Pharaohs is also casting a shadow on the global financial system which is worried about oil supplies and about the unrest spreading.
The US markets had fallen sharply on Friday, a drop reflected by Asian markets including India, when they opened for trade on Monday. Crude oil prices have also started going up, touching a level of $99.97 per barrel — just a shade below the three digit mark. High crude oil prices will hurt the global economy which is also facing a problem in the form of high food prices, said European analysts. A single event echoing around the world is an indication of the interconnectivity of the financial markets.
November last year had seen a similar drop when North and South Korea exchanged artillery fire over a disputed boundary. Markets also tanked when there is a sovereign debt crisis in Europe as FIIs exit at the first signs of trouble. “Markets will calm down if the Egyptian unrest remains localized,” said Mr Jyoti Jaipuria, head research, DSP Merrill Lynch Ltd.
The Sensex opened negative and plunged more than 300 points primarily in a reaction to the global cues following the unrest in Egypt. But a combination of short covering and value buying lead to the remarkable recovery. The Sensex closed just 68.21 points down at 18,327.76 and the Nifty closed flat 6 points down at 5505.90. The Egyptian issue is creating problems for world markets and since India is the weakest it was impacted the most said Mr Ambareesh Baliga of Karvy Stock Broking.
Mr Jagannadham Thunuguntla of SMS Capital says the Egyptian unrest was just an excuse for the markets to go down because basically the Indian markets are looking very weak.” Mr Avinash Gupta of Bonanza Portfolio Ltd feels that one should not get carried away by the rapid recovery as markets are not in a comfort zone and should consolidate at 5400-5700 levels on the Nifty for some time.