If we look at the Interest rate side, it should ideally go up. But it is coming down. If interest rate increases the corporate and big companies will be in trouble. So, they will not increase interest rate now. This is a very big factor.
On 29th Jan 2010 Central bank surprised markets by raising banks' cash reserve requirements by more than expected and warned of mounting inflation, setting the stage for lifting interest rates in the coming months.
Banks worldwide will be restricted. US will come up with lot of restrictions for Banks. This can be a negative factor for the markets.
FII’s invest into India for Long term, Short term as well Medium term period. For FII’s India is small economy. We clearly don’t know for what Term they have invested in India. They can pull money from any one of the above as they have to pay back their loans and keep the money safe.
I believe that markets may see more downside in near-term. But things are unpredictable; you do not know how globally things pan out and in this to just map liquidity and say the markets will get supported because liquidity has a habit of chasing prices and vanishing when you need it most.
