Frankenstein

The Double Taxation Treaty slaughtered the Indian equity markets yesterday. Or rather the rumors that the DT Treaty with Mauritius will be reviewed made the market jittery and the Nifty fell by close to 2% during the day. After the markets closed I heard some noises being made that the review might not affect the capital gains treaty. We will wait and see when the review actually happens. Whatever be the case, by pure chance, this unexpected rumor benefited my short positions. I remain short on both STT and LTT. I will cut my short positions and go long on STT if Nifty crosses 5392. The LTT trigger still remains 5610.

                                                                     

The Double Taxation Treaty has unanimously been blamed for the fall in the Indian market today, replacing the USUAL Suspects the Euro,inflation and corruption issues. But Euro problems and inflation have been around far too long to give up without a fight. In the coming days, I am sure we will be rounding up these suspects once in a while and presenting them to the world as the cause of any fall in the market.

As I write this note the Euro has gained. Apparently Luxemborg's Jean Claude Juncker assured investors that a solution will be found to the Greece problem or something to that effect. (I do not know why these assurances happen only after our market hours) A Bloomberg News story even quoted Bruce McCain, a chief investment strategist overseeing USD 22bn at the private-banking unit of KeyCorp in Cleveland as saying and I quote here from the news item "There's anxiety about the European debt crisis. If they can somehow kick the can down the road there is more upside potential than downside risk. The market is oversold"

This incredible insight was just what the market needed. S&P rejoiced with a 0.5% gain over the previous close. I only hope that we can continue to kick this can because I do not see the problem resolving itself anytime soon. In fact I worry about the fact that even as we kick the can down the road, the can will grow in size and before we know what started out as a can will begin to resemble a barrel. Soon, one cannot kick the can-one will have to push the barrel. Then as the barrel grows in size many will have to start pulling it and then when it grows even bigger and becomes a monster that cannot be pushed/pulled around anymore? Who cares? Hopefully somebody else will be left holding the can/barrel/monster.