The Downgrade & A Lesson in Chart Patterns.

Saturday morning in India brought really breaking news – that the S&P had downgraded USA. The news was quite exciting for business news channels, with many running exclusive programs on the event. The downgrade was announced after American markets had closed for the week, therefore the impact, if any, will be felt only when Asian markets open on Monday.
I assume that the main impact of the downgrade is psychological – a warning that the USA should set its fiscal policies in order. The other two rating agencies, Moody and Fitch have maintained their top ratings for the USA which means that the downgrade is not accross all rating agencies. Moreover, the power of the rating agencies may have been overestimated, after all it is a private company managed for profits which is doing the ratings!
What happens on Monday? The answer is to wait for the Asian markets and the SGX Nifty to give clues. Even if there is a gap down, I do feel that next week should see a short term low in the Indian Indices. But, over the next few months, Indian markets are likely to under perform the American and European markets.

Lesson in chart patterns – Hindalco