Asia is still a bit volatile; the Nikkei has been darting in and out of the green. So it's flat as we speak. China is up, Straits Times has drifted down into the red, Kospi has been one of the stronger markets this morning, Hang Seng also flitting in and out of positive territory. Taiwan and Kospi actually are the two markets which are doing well; the rest are up about a 0.25% of 0.5%. So a bit of green on screen for sure but it is volatile make no mistake about that and its not gone up hugely. So, cues are on balance, positive but mildly so this morning from the Asian shores.

On Churning and the US market:

No, I don’t think the churning has stopped. But for the moment I think there is a bit of a bounce because you must realise whatever else has happened in emerging markets, the Dow has had a very steep fall from 14,000+ to 13,100-13,200 levels. That’s a sharp fall by American standards. So, even if the market were to remain volatile, a little bit of a bounce cannot be ruled out and that is pretty much what has happened. The day before, the S&P 500 hit its 200-day moving average and from that there has been a bit of a rally, which is entirely expected. I think what is encouraging is that some of the beaten down stocks that you are watching right now like Macquarie and Blackstone, those stocks have recovered yesterday.

So, there is some element of stability that has crept in. I think global markets are still volatile. They may well pull back a bit, but I think may remain this way and that, till the situation clears out because this is not a two-day situation, which we have on our hands.

Also, there are a couple of things, which you need to watch that is external to the US as well. One is, what is happening to the yen and there is reason for optimism there because the yen after breaking 118, has weakened to about 119.30, which is good and is supportive for carry trade. So, at least a little bit of that carry trade unwinding fear is going out of the market for the last couple of days. Also, the CBOE VIX Index, the Volatility Index, has gone down by about 10% odd yesterday. That is not bad news in the context of what can happen globally.

So, fundamentally the problem which started it all remains a bit murky, remains a bit uncertain, which might create volatility spikes as we go forward into the next few days for sure. But for the moment there has been a bit of a bounce-back, which is only to be expected. But as you can see, even Asian markets are quite skittish. They are getting into the green, they are losing gains, getting into the red and from the lows they are bouncing back once again.

So, there is no decisive kind of trade, which is happening in emerging markets. I think there is an air of uncertainty and nervousness, which is prevailing there. But for the moment, we are seeing a lot of green on the screen and that might well be picked up in India this morning.

On take-aways and market through the week:

It is difficult to call. But I think so far, it has not been like May 2006 scenario, where you could not even react, two-three days and boom, you are down 10%-15% in the market. I do not think this time it has been like that and we cannot predict what will happen in US and global markets. But if it remains volatile within a 10% kind of a range, then maybe we will not see the kind of situation that we saw last year because so far you are getting falls, you are seeing buying at lower levels and then again you are seeing falls. So, there is a lot of volatility, which is only to be expected given the run up that we have had and I suspect that you will have to deal with more of that.

10% kind of corrections after such heady rallies in the fast lane of emerging market is no big deal, you went to almost 16,000, can you give up 1500-2000 points from there, every investor or trader should know that, that is a risk which is there at any point in our markets. So, I do not think even if the market were to go down to 14,000 kinds of levels, it is no great skin of the market’s nose. 10%-12% is really par for the course.

So right now, let us not create doomsday scenarios. Yes, we have a volatile situation in the US and in global markets, and it may scar us a bit more. It may lead to far more volatility in the next couple of weeks and you will have to deal with it. But there are opportunities in every crisis. So, maybe there is in this one as well. It is difficult to say what will happen from here. But, I think from where we stand today, at least we are not staring at completely down the barrel at a doomsday scenario, at least just yet.