Indian Stocks: Rising on...hmmm...just rising

Friday, December 19, 2008

Are investors in India back to de-coupling as a theory?  Certainly the continued rally in our markets suggests something...what could it be?

  1. Earnings visibility?  NOT
  2. Earnings Growth?  NOT 
  3. Economic Growth? NOT; see the following articles:
Need of economy booster package in FY'10, too - Montek
More uncertainty; if the administration knew the extent of stimulus required why not move forward with it? - Lee

Next year to be more challenging – RBI
RBI Governor Duvvuri Subbarao said the outlook for India and the world remained uncertain and the path of the global crisis and its resolution remained unclear.
"The year 2009-10 will be more challenging than the current one," he said.
Hard to imagine a more challenging and punishing year than 2008...Mr Subbarao is not out to instill confidence ; however, I agree with him - Lee.

Could it be a time of Global economic stability?  NOT; see the following articles

Global Economy sinking in to severe 2009 recession

Besides this link, I have earlier posted the IMF and World Bank forecasts along these lines - Lee

Germany is already collapsing
The German economy is on the "brink of the abyss", says the IMK institute in Dusseldorf. The country's GDP could contract by 3.5pc next year.
We are reaching depression levels here.  Germany and China have become addicted to exports. This is not as healthy as it looks. They will bear the brunt of belt-tightening by the Anglosphere Club, and East Europe.
Global trade is shrinking, fast
China’s November trade data (a 2.2% year over year fall in exports; a 17.9% year over year fall in imports — see Andrew Batson of the Wall Street Journal) suggests that global trade is contracting quite rapidly. And since trade accounts for a rising share of global activity, it suggests that the global economy has stalled — and perhaps is contracting.
France expected to slide into recession in 2009

Japan cuts interest rates as recession deepens
In its assessment of the state of the world's second-largest economy, the Bank said that conditions were now "deteriorating." Just last month the Bank had described the economy as "sluggish."
So, the Indian market is up on selling exhaustion...and are great teachers.  I think there must be a lesson being taught...the denoument is the 'experience'...some things just cannot be taught, they must be experienced.  Expect a sharp fall in markets in the next few weeks.

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2 Post Comments:

Anonymous said...

Lee good note.
I do agree on the above and strongly feel that the markets could be headed lower in the next few weeks may be abt 10% decline....Let the people experience ..... Good write-ups as usual...
Cheers...Die Hard Fan

Lee said...

Expect 20% downside..back to 2500 levels on Nifty..thanks for the feedback!

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