Few years back, I used to read spam emails about "India would become Super Power by 2050 and there will be something called "Harra Patta" (antonym of US Green Card and work permit for India).
I guess friends"Time has come". Not because that we have done something really big,smart or wonderful. But the world has screwed up "Big Time". Few countries have declared Bankruptcy and some are on the verge of doing it.
Thankfully and fortunately we are not export oriented countries like China, Japan, Taiwan or anyother Asian countries. An Indian economy has 80% internal usage and only 20%export based. Hence India is mostly dependent on its own production and consumption.
Another blessing in disguise is the CPM being part of the government did not allow Congress to do much so-called reforms and hence our banking system is not directly impacted by the financial turmoil across the globe.
Now NRI's all across the globe are looking for safe placements of their money, forget about the returns. If Indian banks can tap in that mammoth amount of quality FDI funds and that too is available for real long term tenure, we should be able to solve some of our liquidity problems.
Moreover, government needs to do more by dropping the CRR rate more, increase Pension, Insurance etc groups participation more in the stocks (remember this should be temporarily -otherwise we might end up like US today).
Indians on an average have savings of 35% of their income (for e.g. service class has 12% provident fund,around 10% in Insurance premium by them or by their companies and assuming another10% savings in their bank accounts).
One better thing is that our industries/companie
Our Forex reserves are still over US $280 Billion.
We can re-build our Nation sooner andfaster than anyone else. It is not the time for Panic (or panic selling)!
We have been recommending quality shares with the potential to grow. Unfortunately due to global meltdown, financial infrastructure demolition, liquidity crunch, Bankruptcy filings, FII fund pullout etc they are in losses today. However, going forward they should perform well.
Nifty is now 47% lower than what it was at the beginning of this year and we are today at the price of August 2006. PE wise Nifty was 28times and Midcap index at 23 when at its peak in Jan 2008. Today Nifty is of about 14 times and Midcap around 8.5 times.
So is it the time to buy OR wait ‘n watch?
On one side the valuations of shares are dirt cheap, oil prices corrected below $80 per barrel, commodities prices are falling and inflation receding. It seems, today there is mere a liquidity crunch and once that is made available by government or NRI’s or public/private institutions,
On the other hand, global meltdown, financial infrastructure demolition, Liquidity crunch, Bankruptcy filings, Redemption pressures etc will lead to poor production and profitability. Hence the lower values of shares which look attractive may not be so attractive.
What a week it was! World market crashed from 28% to 10% over the entire week. Our Sensex dipped 15.96% to close at 10527 and Nifty fall 14.12% to end at 3279.
India's industrial production rose at a paltry 1.3% compared to a healthy 10.9% in August2007 or 7.4% of July 2008.
US $ to Rs fell upto49.07 and is now around 48.4
Crude Oil is now under $80per barrel.
Inflation numbers at11.8% from the last weeks 11.99%
FII’s & Domestic MF have sold over 3800 Cr and 851 Cr respectively until 8th of Oct.
SEBI removed restrictions on offshore derivative instruments (ODIs) in both, the cash as well as futures & options segments of the market. Also the SEBI chief C.B. Bhave said the 40%cap on ODIs, including participatory notes (PNs), out of the total assets under custody in the cash market will also be done away with.
RBI changed the CRR cut from the proposed 0.5% to 1.5% and is now at 7.5%
Q2 September results have started coming out with a weak note and cutting earnings and revenue guidance.
Market is yet to reach its bottom. There could be minor bounce backs and one should not get into its trap. There is a good possibility that we might see 9700 in Sensex and 2900 in Nifty i.e another 10% from here. It is time to create the wish list of quality shares. For execution, wait for some more time.
It’s better to lose an opportunity than erosion of Capital!
BigGains !!
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