Stock Market Up After Black Monday: Is The Worst Over?

A day after experiencing one of the steepest declines in recent times, Indian and Asian stock markets opened higher on Tuesday, bringing relief to investors. The BSE Sensex gained more than 600 points in early trade, while the Nifty 50 rose more than 1%, after Monday's sharp losses that erased over Rs 19 lakh crore of investor wealth.

US Market Recovery Fuels Hope

This upbeat movement is being mostly viewed as a reaction to the bounce back in U.S. markets. The Dow Jones Industrial Average closed Monday's session with a modest rebound, temporarily allaying fears. 

Global investors seem to be responding to expectations of possible negotiations and easing tensions among key economies. Some bargain buying by investors following the drop may also have helped fuel the bounce.

But Is It Really Over? Analysts Warns

Despite the recovery, it is advised against taking it for granted that the storm is over. Markets are a dynamic system influenced by numerous global and local factors.
Ajay Bagga, a Market Expert is convinced that America is overstretching by pursuing too many countries simultaneously, even its allies. He cautioned that China might have to redouble efforts to consolidate its networks of influence in trade, currency, and international relationships.

Bagga feels the worst of the market uncertainty is behind us. There are indications of stabilization on the horizon, but it is uncertain for how long any recovery will last. He also states that the world is moving into an age of disorder and unidentifiable risks, which will continue to test policymakers as they do investors.

"We are probably past 'Peak Uncertainty' and markets should see some plateauing soon as we cross the 'worst is here' stage. Oversold markets will bounce, but how durable that bounce is, will be a significant question." he said further. 

As veteran investor Bill Ackman said last week, " Business is a confidence game… and the president is losing the confidence of business leaders around the world." While short-term rallies offer some relief, they do not necessarily represent the larger issues. 

The next few days will be decisive in establishing whether this rebound will be sustained or only a short-term relief rally during a larger tempest.