India: Ugly morning in Markets

Friday, October 24, 2008

The indices are down sharply; Nifty at 2720 down (7.5%). Every sectoral index is down:

Banks (7.5%) Realty (9.5%) Metals (10.1%)

There is nowhere to hide.  Eveything is being marked-down in anticipation of even more selling by funds.  The rupee will crumble;  corporations which had borrowed in USD and Yen will have significant losses.  If the government intervenes in exchange markets then our foreign currency reserves will dissipate rapidly.  Better to keep the amunition for the aftermath of this carnage.

I continue to expect a significant liquidity event in India;  that would herald the final blow-off of the market capitulation stage.

Stay on the sidelines...  Rumours of a payment default by a large realty company today.

Some of these rumours will turn into reality in the coming days and weeks.

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