India Infoline on Market Strategy
The winds of change continue to blow away from markets world over. The seven-day rout, which has knocked off about 20% from the key indices, is likely to continue, at least in the early part of today’s session. And, no prices for guessing the reason behind our grim forecast! Market participants will continue to pay a price as stocks on Wall Street got pounded for a second day running, amid uncertainty over the fate of the American auto giants, continuing bad news on the economy and growing concerns over the health of Citigroup.
The Ambani brothers may have shook hands after four years. Dont read too much into it. Thats more because they landed up at the same place, same time to discuss the same issue with the Opposition leader LK Advani. Again no prices for guessing what the issues are. Leading industrialists met Advani who promised to restore confidence in India’s growth story if voted to office. Advani message to the gathering was that BJP was “willing and able” to tackle the economic challenge.
A recent survey Mood of the Nation conducted by India Infolines institutional arm – IIFL states that Nationally there is a swing against the incumbent UPA alliance. Inflation and terrorism are the most important issues for voters..one of UPAs biggest achievements, the Indo-US nuclear deal finds no resonance.
Meanwhile, the economic and financial contagion is not restricted to the US alone. The news flow from across the globe remains downbeat and bleak. Every day one hears or reads about profit warnings, slew of job cuts and production rationalization by companies to cut costs and stay afloat. A large Indian corporate may also announce some downsizing later this year. We do not see any let up in this string of bad news in the foreseeable future, as the worldwide economic gloom deepens.
The solace one can derive is the steep fall in oil prices. But again, the slide in crude is mainly due to fear of demand destruction in the face of the savage economic downturn rather than any drastic change in fundamentals of demand and supply. For India though, lower crude prices could prove to be a boon, as it will lower inflation further, opening up the door for more rate cuts. But, the fact remains that the markets are refusing to respond to any regulatory action to reverse the tide. Investors remain highly pessimistic and skeptical about the effectiveness of any government initiatives (unilateral or global) on the rapidly deteriorating economic climate.
-From Investors note on 21st Nov 08.
If you enjoyed this post, please consider to leave a comment or subscribe to the feed and get future articles delivered to your feed reader.
Comments
No comments yet.
Leave a comment