Sovereign Debt is the new face of Sub Prime this year.
It does not matter whether the ECB or the EU decides to bailout Greece or not. What matters to the Indian Markets when they open tomorrow is that the Dow Jones closed on a very happy note. Infact the benchmark index witnessed it's biggest gains in today's trading session since November 2009. So the Indian Markets will definitely open on a positive note tomorrow morning and I feel they will move up quickly to make up for the downside seen in the past few sessions of trade. The nifty might just gain another 50 to 100 odd points tomorrow. Metal stocks likely to lead the pack of gainers. But what I feel is that this sudden up-move could just be another one off incident and that the US as well as the world markets may correct further in time to come, due to the changing economic scenario in the European Union. Greece could only be the first one to fall in the EU. There are other nations which will follow suit. This is most worrying in this whole scenario. When banks falter Central Banks bail them out. But when Countries falter then what will happen? In that perspective the scenario is even more grim than the Housing Mortgage Crisis of 2008. But one thing is for sure that whoever bails out Countries like Greece or other EU nations that need to be bailed out there will definitely be a squeeze on the valuations. Again I feel it means a lot to the Indian Markets since on one hand Markets here will react to market mood worldwide on the other hand India itself has considerable interests in the EU in terms of bilateral trade. Infact with the Union Budget being scheduled at the end of this month I shall take a very short term cautious approach to the Indian Markets. I feel if the world markets see some decline and that coupled with some tightening in the Union Budget could make the Past come back and haunt us. I think the markets could see a major correction next month. Infact I feel Q1 results could be crucial as far as 2010 is concerned. It could chart the way the Indian Market would behave for the rest of the year.