Tuesday, January 29, 2008

Why there is no Mayhem seen in US market?...........

We have seen the worst kind of Financial debacle since last 60 yrs.That is what Mr.George Soros is saying....and he fears that it can eventually end in a global recession.....and that is why he is selling lock, stock and barrel...in Indian market....
If the damage is so huge why Dow is not slipping to a below 10k level from the high of 14k...means 30% down from high?When the US economy is going slow and ultimately will end in a recession then why US investors are not scared of in holding stocks?Why they are not selling in huge quantity?What is to be understood?Is the recession FEAR a FLASE FEAR?Are Fund managers overdoing the analysis?What is that?Are they trying to put pressure on Ben to cut rates?
I am surprised to see Why, How, and for what reason Dow is not exhibiting the bearishness we are seeing in emerging markets?If our market can tank from 21k to 15500 means a drop is 30%, when Hengseng , Korea, Nikkie, China,Russia, Brazil can sheds 25-30%, why Dow is not getting beated in that way.Here one may argue that here in EM's there can be selling of US funds and Hedge funds and hence we are showing such a big fall....but when the selling takes place to pay for the losses in USA market in Subprime Mortgage , then the selling should take place in US market as well and that has happened there also.Citi, Goldman Sachs stocks have nose dived to the extent of 60% and above and still we are seeing Dow at above 12K...that is surprising....Either our sensex calculation is going wrong or the weightage is more in certain scrip.I think it is time to have a look at calculating the sensex points.Sebi has to think about it seriously.
Now let us assess the situation.The majority of the fall happened was due to over leveraged in F&O section and that damage is done.I think we should look forward to our growth which is still in tact.I heard Ramesh Damani and Shankar Sharma in taking stocks.Though not heard word by word but both were extremly bearish I can understand about SS but was surprised to see RD becoming bearish..No doubt the excesses were there but it has been precipitated in this carnage and we are almost even back to normal...as P/E is now at 14!Wow!But SS says ,he feels we will a negative trend in our market...means bearish trend...which I don;t think so could happen....as the 3rd qr results are coming good....and henec no reason to be bearish....I only know one thing and that is good fundamentals and Bear market cannot walk hand in hand.....
I am bullish uptill 15 Mar 08 where again a big storm can come in the name of profit booking for March ending..........but I am seeing a big rally starting from 1st Feb onwards.....
Let us see,
Warm Regards,
Rajeev

6 comments:

  1. thnx rajeev sir,
    i am also thinking if inflation is high in america so how they are reducing rate. reducing rate means high inflation.

    Ahmed

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  2. Ahmed, Don't call me Sir...
    reducing rate by Fed is due to the subprimecrisis.Ben Bernanke has no other options then to cut the rate as there has been a liquidity problem in USA.
    Ben knowing that inflation can go up, but have no option.I am seeing still more rate cut.
    Same problem here.Reddy ahskept the CRR rate , Repo ,unchanged and that is only due to inflation FEAR.
    But inflation is bound to increase with economy growing.
    How much PC and Reddy will be able to contain the inflation is to be seen.

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  3. Here is chat excerpt from Damani and it tells you why he was so bearish. Lets see whether George Soros is right or not:)
    :

    wavestudent: Sir, George Soros says the US is at the end of a 60yr. cycle

    Ramesh Damani: that is what has me worried..he knows big global changes

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  4. On one hand you get bearish calls like the one i posted from Damani and on the other hand you get bullish news like "BNP Paribas infusing 570 Cr into India" or "US pension funds seeking increased play". our FM is very very confident about India not being affected by US recession if it does happen.we sure are in interesting times :)

    Below is pension funds link
    http://www.dnaindia.com/report.asp?newsid=1147841
    CalPERS says it’s foolish to avoid India; wants half of its $150bn in equities to be in emerging markets n $436bn TIAA-CREF has put in $500m

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  5. For Prashant and Rajeev

    Dear Prashant,

    I have absolutely no doubt at all about the India growth, the hummungus infra structure development that is beginning to be seen on ground, [the first interantional airport at shamsabad gets inagurated on 16 March, is one eample] and the remarkable achievements that some of our great companies are demonstrating and will. Am impressed by the manufacturing sector also shoring up.
    I absolutely agree with what Rajeev says, that has Indian economy gone to dustbin overnight!
    From sensex at 8500 onwards, whenever friends sounded alarming bells to say get out, I always sat down with the individual scrips I was invested in and found that I had no reason to get out.
    That still holds true. When a mayhem like this comes, I look at the individuals scrips.

    And yet, There is one concern on which I find I resonate with Soros and that is if there is a serious US DECLINE, there will be geopolitical tensions. I take the trade deficit China has allowed to build seriously. I see it s as a game plan. It seems to be that China is ina tearing hurry to become very powerful and self reliant econoimically. I saw their plans of self-sufficiency in power and energy security while there.
    There is a huge tilt towards nuclear power.

    Couple with this, let us look at the imperialistic actions of US over decades, they have destroyed economies of Latin American countries one by one, then Afghanistan, and now Iraq.
    On my recent trip to China, the impression I formed was that there is a new bioploar world in making : US and China.
    And that worries me for India.

    I am very bullish on India and its economy. It is the rise of China, and if it comes along with decline of US, that is a concern.

    Regards KM

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  6. Dear Rajeev,

    Your post makes a very interesting read and perspective.
    Not having paid much attention to the US stock market, I was not aware of this factor. Even if I had seen it, it is unlikely I would have interpreted it like you. Thanks friend.

    I took 20% position in JCT at 16.00Waiting to see how much it falls. Will add by and by.

    I want your view on two scrips I have enterd in.
    Compac Disc and
    RIIL[small quantity]
    I also want to know if you have a view on Asian Electronic dealing in e-waste. I have come across it recently.
    Please advcie on them when you have time.

    Regards KM

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