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Commentary

Dow below 10,000

The Dow is currently trading below 10,000 – at 9,800, a level last seen in October 2004. In India, the Sensex went to the lows of September 2006. There is panic everywhere.

Time to buy? Perfect for a short term bounce now? Yes, I see the Indian indices going lower than this; but that doesn’t mean it will go straight down.

Two 4% down days, and the last 10 days have seen a fall from 4300 to 3600. It could just be that the index will move up. Yet, I could be horrendously wrong here – today there was simply no turnover in the cash market – just 10K cr. Which means the selling isn’t shorting – it’s selling. Shorting means a cover will drive prices back -the lack of shorting = nothing to save the index.

A CRR cut and PN reparticipation (Sebi has removed restrictions on PNs) should help the market. Yet, this is not a normal market and will not react normally. So expect anything. I am long at this point – a position I will eventually build as the markets go down further.