Saturday, August 28, 2010

The free market Roller Coaster

Great fears are being felt by people who are expecting the US markets to tumble by September. The Indian markets today have witnessed a down trend taking SENSEX below 18,000 psychological level. If the FII's start booking profit, then we are going to see a further fall in stock prices, especially companies with more export exposure.

But the above mentioned ebb is just in the near term. A country like India will feel the effect, but it's not going to be predominant. The simple reason being that domestic consumption in India can substitute for exports. If you look at the Auto Industry, it has been posting almost 23% YOY growth in the last quarter. Encouraging signs.

Lastly an economy like India is bullish in the long term. With other geographies trying to tackle the recession, India zooms ahead of the pack. Even China is bearish, despite the fact that they are an export economy. We hear stories of China downsizing factories in Schenzen , Guangdou and other locations.

When will Europe and America recover? We really do not know. There are different schools of thought. The banking system is the fundamental backbone of any country. What do you do, when a duck starts swimming like a swan? The cat is out of the bag. Now all ducks will have to get used to the fact that they simply cannot become swans, the short cut way.

There is so much of bad debt in the whole world (due to lack of regulations) that, it does not seem likely, that the markets will bounce back in the near future. But for India, the growth story will continue.

Ring the bells. Christmas is on its way.


1 comment:

Anand BK said...

We have IIMS hatching lot of MBA jaguars but they also dont know when this market Roller Coaster is going to get over. This world market is always volatile. Everyone can raise questions but who will answer. I also raised this question many times but one answer I got most of times "God knows"...