Tuesday, May 31, 2011

Wary of QE2 withdrawal effects!

At a time when Indian markets were nearing valuation comfort, they surged again. Usually, it would be a positive reinforcement and time to get in. However, I am not sure today. The risks arising out of end of QE2 pose significant threat to markets.

On its own, the end of QE2 alone would be a perceptible trigger. But more important is the situation of world economies at this point. With EU on the brink of another crisis, waning strength of US recovery and still-to-gain-traction Japan, we are at the most unstable point in recent years. At such a time a withdrawal of QE from US may not auger well for the markets. 

I guess we must hold on tight and keep powder dry for there may be interesting times to invest in very near future. 

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