Where will India be if the Dow breaks 7,500?

Angelite

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posted on 15 years ago — updated on 1 second ago

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The Dow Jones has hit its lowest level since November.

The Dow Jones has hit its lowest level since November as stocks started the week off on a sour note. It finished the session down 298 points, Nasdaq lost 64 and the S&P 500 shed 38 points.

Although India managed to survive the global meltdown, it was mainly due to short covering. Short covering took place as India was already seeing a bout of selling following diappointment in Interim Budget.

Experts feel the Dow is perilously close to breaking 7,500. They believe that the gap between the events in the US economy and the rest of the world is narrowing. Infact, First Global's Shankar Sharma feels the Indian markets may hit new lows of 7,200 by February or March.

The main cause: There has been a record contraction in New York manufacturing, which spurred concern that the government's stimulus package won't be enough to curb the deepening recession.

The road ahead: For the Dow

"Dow Jones is on the verge of breaking 7500, which would lead to 6700 quickly and eventually down to 6200." JM Finance says.

Ashwani Gujral also mirrors that sentiment. According to him 7449 is the key support level on the Dow with a target of 6000 points on the downside. As for the S&P 500if it breaks 740, it may go down to 540.

That the Dow will touch 6000 seems to be the general consensus among experts.

The road ahead: For India

Shankar Sharma believes that the disconnect between the events in the US economy and the rest of the world is actually narrowing. This is obviously bearing on China and India which are slowing big time.

In such a scenario, he feels the Indian markets may hit new lows by February or March. The last time the markets had seen such lows was in October last year.

This time however, he thinks the new low may be deeper than the previous one. "I expect the Sensex to retest 7,200. We see strong support at 6,000."

Asian markets comparison with their respective October month lows

CLOSING LOW DATE

Nikkei

7554

7163

5.5 per cent

27-Oct

Straits Times

1632

1600

2.0%