Bear hug tightens over global equity markets

The ‘bear hug’ has tightened over global equities so briskly since the start of the year that even the most pessimistic market commentators would go wrong in their predictions. More than half of the liquid equity markets in the world have officially entered bear market. Typically, a decline of 20% from a recent high is construed as a bear market. Equity indices of Hong Kong, China, Brazil, Singapore, France, Germany and Taiwan have fallen 20% or more from their recent peaks. And markets in India, Japan and Britain are close to turning into a bear market.

Indian benchmark Nifty is just 1% away from entering the bear grip, considering its 52-week high of 9,119 it touched in March 2015. None of the top equity markets is trading above the 200-day moving average, a key technical parameter. The triggers for the upheaval are not difficult to guess, namely Chinese slowdown and the sharp fall in crude oil prices.