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| Will the Market Improve ? What can happen ahead? |
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| When will the market improve. This question is often uppermost on the minds of the investors for obvious reasons. Again improvement is a relative term. i.e. for some 15000 is a good enough improvement whereas for some 21000 may not be enough.
The world economy is facing recession is a fact which cannot be denied. The Economy behavious is very cyclical. i.e. one positive event trigger another and one negative event triggers another. BOOM is a scenario when there are more positives and DEPRESSION is when negatives outweight positives.
The Indian economy is resilient enough to withstand many global shocks, but it cannot completely escape the ripple effects. Prediction of the market behavious is more difficult due to this reason. At 17000 onwards everything was going good. When it touched 21000 nobody expected the market to go below 15000. Now even if we talk of 15000, we sound OVER OPTIMISTIC. What the Lehman Brothers were upto, nobody could know sitting in India. What fraud certain company directors indulge into, nobody can forsee.
Currently USA economy is in bad shape. From the feedback received, the Credit card industry may face severe problems. This could lead to many banks going bust in USA. I wonder how much of taxpayers money can be poured into the economy to bail out such firms. If USA economy collapses, the EUROPE will follow and later on CHINA because it is holding huge reserves of US dollars. Once CHINA starts offloading dollars, the USD can come crashing down to the extent of even 16rs per dollar. People holding on to the imported stocks will face a dilema of selling off their products and the new products will be available at half the price. WE MAY COME FACE TO FACE WITH DEFLATION. DEFLATION IS MORE PAINFULL THAN INFLATION.
There will be huge MACRO adjustments in the economy and for that, certain sectors will face bad times and certain sectors revive. Those companies having imports will survive depend on the stock they are holding. Exporters may suffer, but if they are able to cater to the domestic market (which has been given a raw deal by cheaper quality products so far), they will survive. India will face trouble but eventually it will emerge a winner, as India is self sufficient in many respects.
The global recession can bring down commodity prices, the forwards contracts will fail. Any company have a lop sided exposure to some contracts may face crisis. The could be global turmoil. I could go on and on with the after effects, but it will end up me becoming a author of a Textbook. - Kishore Bhambhwani
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