**[investwise]** Ajit Dayal: Treat The Current Sell-off As An Extension of The US Crisis, or not, at your peril

 

BSE Sensex 8000? 10000? or 12000? Name any figure. It is now becoming abundantly clear that the meltdown that followed the Fall of 2007, and which seemed to have gotten over somewhat in 2009, has now found new marshlands in-Southern Europe, and most of the Central and Eastern European nations. It is now widely known that perhaps the only two solvent nations in Europe-that too of any material significance are Germany and France, alongside smaller nations of the Nordic belt. The rest are bail-out candidates.  This possibly explains the selling by both FIIs and DIIs in Bombay today-a first seen in many months. But worst, this trend may continue indefinitum. Why? At $ 180 bn in Equity Exposure, it is the Institutions that hold the Bombay financial world by the scrotum. Now this may sound like a warning bell for investors.  As per a survey by India's leading industry agency FICCI, the country might see FIIs pulling out in large numbers over the next six months. The reasoning being that these investors will hesitate to pour money outside the US because of the European debt crisis. And not the equity markets, even the debt markets here are likely to be impacted.  We won't comment on the whether this prediction will come true or not. However, we also believe that the broader macro scenario can remain tough for some more time. This is given that more cockroaches are tumbling out of the European cupboard - Hungary being the latest! And Hungary might soon be joined in by Romania, Serbia, Croatia and Poland. Till the time we have more clarity regarding how governments are going to handle the crisis, times will indeed be tough for global investors. And emerging markets like India, which depend so much on this class of investors, can see some weakness. Safe Harbor Statement: Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.   Nothing in this article is, or should be construed as, investment advice.

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