Market View
Yesterday’s fall across the globe was due to Credit Suisse going under ! So scare of the fall of big banks continued since last Thursday.
Market wanted a news to fall and 25% decline in CS stock in a day came handy.
But fall in CS stock price was nothing surprising…it is falling for the years.
So where we go from here !
And we had 2008 kind of scare in last 4-5 days with the news of few American and European banks going under .
Well , as mentioned earlier , we are in last leg of this 18 months of bear -market ( from March 2020 COVId lows , we had 18 months of bull run and 18 months of bear market ) . Bear market generally end in 18-24 months period .
Last night , US stocks partially recovered after giving a scare of waterfall- type of fall - the fall was because of the panic over Germany banks .
And that worry also seems to be the last straw in ongoing 18 months old saga - yesterday it was over Credit Suise stoack that fell 25% in a day .
But if we look at Credit Suise stock - it was already down 90% in last few years as is obvious in the above chart - when a stock is already down to 10 from the levels of 100 that means all major worries have been discounted and this last fall of 25% in a day for a stock valued 10 ( that already came down from 100 ) was nothing much but a newspaper headline and a panic -creator .
US local banks currently seems to have been saved - US does not want 2008 type of mayhem , hence their playbook was ready for similar situation .
That’s why they provided safety to their banks within 48 hours and that too over a weekend .
US won’t let its major institutions to fall and would keep providing the liquidity wherever required .( same was done by Bank of England as well as many other countries)
Now if we keep the big institutional- downfalls’ concerns aside , the only worry is about recession.
Well , that is going to unravel in slow and grinding manner and most of the people are aware about it .
The actual depth of recession would be felt in coming quarters results - market would keep making guesses and would keep discounting it gradually .
And as usual , the market is a forward discounting machine - as soon as it starts smelling some green- shoots - it would start a recovery .
That might take another 3-6 months but few of the stocks are already available at great valuations and at a good risk - reward levels .
Global Markets, in general , can fall other 5-7% from here before forming a base to start next leg of rally .We might see a quick recovery from here in April and then final leg of decline can be slow and grinding.
In India, the companies exposed to Europe and US may face some challenges in coming months ( but few may benefit due to China+1 story ) . On the other hand , the companies focused on domestic consumption may not do badly… we only need a good Monsoon - hope the gods would be kind enough .