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What makes me think market will be below 13000 at year end ?

chetan parikh's picture
Submitted by chetan parikh on August 15, 2009 - 00:29

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Submitted by anilmehta on August 18, 2009 - 02:20. #

I think I agree on all point mentioned by you Chetan. There are few more things to keep eye on

1. Currency

US Dollar is showing some strong signs lately. If dollar gets strong that could affect import bill and hence cost of energy in India.

2. US Economy

Markets are putting too much faith on US economy . which is yet to be varified. There has been some data of improving housing . But market need more time and data to verify it.  Talks of second mortgage default wave can be real. It all depends on how deep Mr Obama's relief package can penetrate.

3. China

This is clear sign how interlinked and interdependent global economies are. China produces good for USA , but it imports copper/steel to produce that good. Strong US economy means more business for china means more business for Chile .

 
Submitted by chetan parikh on August 15, 2009 - 01:12. #

I know this sounds crazy, when Indian markets leaping 500 points a day. But as they say in short term its euphoria and sentiments that drives the markets.In long term market relies on fundamentals. I know .. I know .. India is different, it took 5 years for Satyam to come out and say we were not doing good. If I would have shorted satyam 5 years ago. I might have taken Deprovan and gone with Michal Jackson.

I still think there are fundamental weakness in markets

1. Inflation : Inflation is going to raise it head , food prices are up and common man is getting crushed. There is less land available for agriculture, water is scarce.

2. Housing : India hasn't seen what American and UK have seen.Bank's loosing money on non performing assets. Does it mean in India there are no loan defaults. Govt is trying to support real estate sector, but govt can not change fundamentals of demand and supply. Over construction is visible and real estate prices are inflated all across india. The very same issue of affordability will cause trouble.

3. Low interest rates: US Fed kept interest rates at quarter percentage. Isn't that's what earlier Fed chairman Grenspan did . He was criticised for keeping rates too low for too long.

( will continue this article .. soon )

 

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