Friends,
Wish you all a very very happy Diwali and growth of what you invest in today’s ‘Moorat Hours’ at bourses.
The world’s indices are trying to regain a new respective real parity in terms of strengths they have with foreseeable future in sight, all in the aftermath of, US created and largely confined to US, financial crisis (partnered by those smaller economies of the west which sought expansion in overly internationalised economy of US). The rest of the world is also facing problems but more account of the loss of benefit that they were drawing form US markets and less on account of financial break-down. They are having to sigh more just in sympathy as they do not want to be seen drawing comfort out of the US and western losses. While their comfort is related to that only and is an ugly fact. The crude is an essential item to ensure continued growth of emerging market economies particularly India and China. These countries have all other advantages but less of oil. The most important advantage is large local market (more perfectly developed in India than in China). The requirement of a big unified market brought the European nations together who in fact don’t see eye to eye, in the most matters.
If deeply analyse, it turns out that in the near future times the China which integrated its economy with US in a large measure, will face some grave crisis. It may be that nothing comes out in terms of doctored statistics but the Shanghai Index is telling it all. The DOW is confused and goes up and down in an directionless manner as if there are some things known to few but unknown to the most. Those who are in the know may have to correct their view and those who would come to know may have to take fresh view of things. Did it not happen that the facts have taken a whole 12 months and more to come out and get assessed. What would have been discounted much earlier is still bothering and that is the reason I think the whole bundle of facts is yet to unfold. Either way, the US will have to face times of lesser advantage and will have to put up with lesser share of consumption of worlds riches. The high value of dollar is making China richer due to high dollar reserves with it but its edge will be lost, the US will import less and try and develop its real economy with lesser stress on financial industry which is pass-time of rich only. India on the other hand is seeing the turmoil in market because it is more integrated there but none of the severe ill effect any where is felt. The crude price drop is a real shot in arm. The recession will be taken care of by increased govt spending. Our PM confirmed it on Chinese soil saying that what we have done by way of govt spending without revenue is OK by Keynesian remedy in such times. Very much so but his team should make the markets go way up otherwise how else the seed (risk capital) will be raised for the fresh projects.
I have recounted only recently the strengths India carries viz a viz other economies of the world, I would skip it here.
There is a spate of good news, if only good news would start having positive effect. I recounted the possibilities about Nifty and related matters. The SEBI has, in fact in a surprise move, allowed the promoters to keep acquiring in open market up to five percent equity in one year till it reaches the 75 pc ceiling. This will not even trigger a public offer requirement. A reasonable announcement in good time. SEBI is initiating a probe into markets’ odd behaviour on 24th and 27th Oct. Power Minister said that global slump would not affect capacity creation of around 90000 MW by end of eleventh plan. A lay out of Rs 10 lac crs will be required and debt /equity ratio will be 70:30.
Porsche has bought nearly all free-stocks of VW and the stock vaulted up by 98 pc. Honda has upped production of fuel efficient cars. Electrolux AB has beaten estimated profit figures. FED chief may push overnight rate to zero (when borrowers have trouble and the lenders have danger of loosing capital, what better alternative can be found than making interest zero). US house prices are lower by twenty pc from peak and foreclosures are growing. This is not a very bad thing to happen unless accompanied by some other oblique arrangements between the involved entities. In any case the end to trouble shouldn’t be far. There are signs of thawing out in banking sphere. The rates paid by banks for borrowing are only half of what the most intense moments of panic saw them offer. The rescue package has been put to practice, banks have had money flowing it to US.
Those who follow this site would recall me having said in Oct 07 that the then Nifty level was wrong at 5500 and should have been at 4100, earlier when it was 1000 in 2002 I had estimated its value at 1700. In the same way I have reason to say that the right level for Nifty is somewhere between 4100 and 4500.
I commit myself rather too early but how can you not speak what you see or perceive. Also if you are not from the first ones to give a glimpse in to future, what are you of worth!
The learned should excuse me but my readers are of all ages and of all backgrounds. I have to some times repeat the points, say it in a different manner. Yet more is thrown into my writings because I want to give a piece of old history and record new history.
HariOm,
Krsna Khandelwal
BIRDINFO Stock Rx – A prescription for stock market
