Easy come, easy go
Till about two months ago, Indian stock markets were the toast of not just investors in India, but around the world. The rise of the BSE Sensex from about 12000 to over 20000 happened at breakneck speed, in perhaps 18 months or so.
And then the January effect happened- yet again. Fueled by the sub prime crisis, rising crude oil prices, worries about the US slipping into recession and so on, Indian stock markets have lost over $500 Billion in terms of market cap in the last 2 months or so. Individual stocks have declined by as much as 50%.
“The long term India story is intact”, say analysts, almost unanimously. But to paraphrase John Maynard Keynes’ famous observation, we’re all dead in the long run!
Personally, I think we’re in for an extended bear phase. At least till the US elections are over and there is clarity on who the next President will be, I don’t think the Sensex will stay beyond 18000 for any meaningful period of time. Hopefully, by then, the dust will start settling on the sub-prime home loans. Just keep your fingers crossed that credit card loans and consumer loans don’t start souring!
And with Indian inflation steadily inching up, interest rates have to go north too. And inherently, that will put more pressure on equities. Oh joy!
Add comment March 14, 2008
anandkrishna