Dollar's Demise?

After Russia and China, today the Indian view on the dollar was made public. Bloomberg reports quoted Suresh Tendulkar, an economic adviser to Prime Minister Manmohan Singh, that he is urging the government to diversify its $264.6 billion foreign-exchange reserves and hold fewer dollars.

“The major part of Indian reserves is in dollars -- that is something that’s a problem for us,” Tendulkar, chairman of the Prime Minister’s Economic Advisory Council, said.

Already China and Russia have stepped up calls for a rethink of how global currency reserves are composed and managed, underlining a power shift to emerging markets from the developed nations that spawned the financial crisis.

The realization about the consequence of the huge US debt is just about being comprehended. As this grows you can expect the hold of the dollar as a reserve currency to weaken considerably.

The Day of the Bulls or Fools?

Today turned out to be a historic day of sorts.

After the clear cut verdict in favor or the UPA at the center, it was expected the markets would do well on open. But 2 circuit filters and trading being halted on the bourse was not expected by most.

A short synopsis of the days proceedings to quote moneycontrol.com.

Trading on both the BSE and the NSE has been halted for the day as markets hit a 20% upper circuit, after re-opening for trade. At the beginning of today's trade, 9:55 am, the markets were locked at 15% upper circuit and exchanges halted the trade for two hours.

The 30-share Sensex closed 2,110.79 points or 17.34% higher at 14,284.21 and the Nifty surged 651.50 points or 17.74%, to settle at 4,323.15. The Sensex saw the 14,000 mark and the Nifty surpassed the 4,300 level for the first time since September 22, 2008. The Nifty May futures ended with 46.85 points premium.

 

Now, the question to be asked. Is this rally for real or are the small investors getting into a trap.

Does a stock market rally predict an upturn in the economy? Has all the excess in the market played itself out?

I do not think so. But then as it is said the stock markets can be illogical longer than you can stay liquid.

It is still advisable for investors to be cautious.

From a trading perspective, our option trading helps us make money, even if our prognosis of the market trend turn wrong.

We tend to stay neutral on predicting the next course of the markets.

Our focus is on strategies that save our skin in the long run and when events such as today's happen we take hope a bonanza.

Yes, we did do pretty well today!