Failure to specifically address the economic crisis in the US by President Barack Obama and his take on cutting down on outsourcing in a recessionary economy weakened investor sentiment globally and led to a fall in the US market on Tuesday, and the world today.
“Investors globally expected a more specific address by the US president on how to bring the economy out of recession,” said Rajiv Anand, chief executive officer, Axis Mutual Fund.
Almost all Asian markets fell on Wednesday. The 30-stock index at the Bombay Stock Exchange Sensex fell by 3.5 per cent as it followed the US market fall of 4 per cent. Hong-Kong’s Hang Seng fell by 2.9 per cent, Japan’s Nikkei 225 fell by 2 per cent and Seoul Composite corrected by 2.1 per cent.
Investors were also cautious on slowdown signals in the economy and Obama’s stance on cutting down on outsourcing further weakened the investors concern in the US.
“Outsourcing reduces costs and cutting it down will increase the cost of goods and services leading to rise in prices,” said DD Sharma, vice president, AnandRathi. “This will reduce the demand in a recessionary market and has been taken as a negative by the investors in America.”
Some experts believe that the fall in India is mostly because of nervousness ahead of results. “The third quarter results are not supportive,” said Pankaj Pandey, head of research, ICICIdirect.