Friends,
With crisis in EU countries becoming dangerous and I just read today that Greece will default in 4-5 yrs and with that PIIGS (Portugal, Ireland, Italy, Greece and Spain)sitting on $3 tr debt coming for the default the figure that comes out is $3 tr and that is much bigger then the Lehman Br which was around $600 bn.
In that circumataces I fear that Indian Market can also go lower and come to 15k or even lower.
But the beficiaries will be Asia and among them notably would be China, India and Korea.
Let the things unfold in next 3-6 months and we will see our market making a bottom.What bottom we will see is hard to predict but after that the inflows will come in economies like India where the growth is there and there is no danger of any default like PIIGS.
But the advantage is India, China and other Asian countries like Korea will become safe havens for the FII's.
Here in India the Int rate has peaked out and I actually don't feel that RBI can increase the rate in Sep again.
I feel that with Crude coming down and can go down further , the inflation should come down with good monsoon seen in later part of the monsoon season.
But as the talk of PIIGS countries keeps on coming and untill the outrcome is not decided clearly what is going to happen, market will remain volatile.Market hates uncertainty and when the certainty will arrive, whether the Greece or Ireland or Spain will default and that too for how much and what will be then impact on the global economy, market here and in west will remain volatile.
After that I feel there can be an unprecedented run for our market which will last for longer period then expected by players and market participants.
With crisis in EU countries becoming dangerous and I just read today that Greece will default in 4-5 yrs and with that PIIGS (Portugal, Ireland, Italy, Greece and Spain)sitting on $3 tr debt coming for the default the figure that comes out is $3 tr and that is much bigger then the Lehman Br which was around $600 bn.
In that circumataces I fear that Indian Market can also go lower and come to 15k or even lower.
But the beficiaries will be Asia and among them notably would be China, India and Korea.
Let the things unfold in next 3-6 months and we will see our market making a bottom.What bottom we will see is hard to predict but after that the inflows will come in economies like India where the growth is there and there is no danger of any default like PIIGS.
But the advantage is India, China and other Asian countries like Korea will become safe havens for the FII's.
Here in India the Int rate has peaked out and I actually don't feel that RBI can increase the rate in Sep again.
I feel that with Crude coming down and can go down further , the inflation should come down with good monsoon seen in later part of the monsoon season.
But as the talk of PIIGS countries keeps on coming and untill the outrcome is not decided clearly what is going to happen, market will remain volatile.Market hates uncertainty and when the certainty will arrive, whether the Greece or Ireland or Spain will default and that too for how much and what will be then impact on the global economy, market here and in west will remain volatile.
After that I feel there can be an unprecedented run for our market which will last for longer period then expected by players and market participants.
good that you gave guidance to us..I was expecting some inputs from you on the current market situation.
ReplyDeletethanks
Just read on Moneycontrol.
ReplyDeleteDow could crash to 3000 in 2013:
http://www.moneycontrol.com/news/international-markets/dow-could-crash-to-30002013-author_585445.html
SIR TRACKING HBL POWER IT IS RESISTING FALL EVEN THOUGH MARKET CRASHED ANY SPECIFIC REASON FOR THE SAME ???
ReplyDeleteHI Rajeev,
ReplyDeleteI have a request for you to write down some lines about European crisis i.e.. How eurozone is formed & on what conditions & what are the things happend to lead crisis and what could be the potential risk for greece defalut & that leads to break up in eurozone...Plz explain in simple terms what has happend from begining to now..
Thanks
Sushma
Sir, what is your view on HCL infosystems, I has tremendous dividend record.
ReplyDeleteyaa it may go lower.But it's a good time for value investors now.IF markets go lower it's wonderful
ReplyDeleteHi Sushma, like India even US and European politicians do vote bank politics, they are no saints. Good infra and all the blah blah were not the matter of choice but were system driven things, on the broader level they are as corrupt as we are. Before Euro was created, it was only Germany and France who were eligible to borrow money at cheap interest rates whereas other European countries could do that at high interest rates, this was because only Germany and France are high productive countries. When Euro was created and Greece, Spain, etc joined it, they also started getting money at cheap rate. But instead of utilizing the borrowed money to increase productivity, the politicians in these countries started pleasing the people of their constituencies by providing high paying jobs with less productivity. The job for which a Greece labor got money was 40% higher than what a german got for the same job. Since productivity was not increasing at all and the pay hikes were at peaks, so these countries kept on borrowing more money to sustain their vote banks. In simple terms u can understand this with what congress has started in india - NREGA, thousands of crores are spent in the name of rural employment but nothing substantial work is going on, if u go to some rural area, u will see that the labours actually go home after getting their salary without working. But still this is done for vote banks. In spain the workers like to take a snap after lunch, they like to sleep for sometime after lunch, this is the condition there, then how will the country be able to pay back the loan, thats what the question is now. It is bound to default. No amount of bail out will help, it worked in US because they are productive, the same cannot be said about Europe.
ReplyDeleteHi sukanya,
ReplyDeleteThanks for your write-up.In that case greece should default & break from euro-zone ASAP then they can recover at least in 5-10years. If these european & US countries gives more credit to greece then their economy will not recover atleast for next 20years like japan. Waiting for rajeev post as well.
Thanks
Sushma
Sushma and Sukanya,
ReplyDeleteI accept my inability not able to write on EU crisis and the cause.
I confess that I do not know indepth cause for the crisis.It can take lots and lots of time which is not possible to explore for me.
But as Sukanya wrote about Spain I would like her or anyone to write on other countries on the crisis.
GG, I do not track HCL Info so no view.....
ReplyDeleteSunil,
ReplyDeleteI have full faith in my call on HBL Power System.Well, I may go wrong as happened with my other calls.
I keep my right to be wrong.
aditya,
ReplyDeleteI read the link but I have many questions to ask for what he is saying.In nutshell, I don't think what he says can happen......
Sravani,
ReplyDeleteThis are all predictions and one should always remember that I can go wrong at any given time...eitherway....15k can come and even 12k can come and 15k can never come....anything can happen......things can change suddenly as well...we never know ...
Hi Rajeev,
ReplyDeleteBy any measurement I cannot claim that I have better knowledge about all these than you. Like Sushma I too was curious about euro crisis, so whatever I wrote was something that I heard on TV and some googling. That Spain thing was said by one of my favorite analyst Rajesh Tambe on TV. The problem with Euro is that Germany cannot throw away non productive countries out of Euro zone as they have lent billions to them to keep things going, now if Germany throws them out so obviously they will default and Germany will not get back its lent money and hence German economy will come into problem which will lead to a bigger problem. It has become an unbreakable cycle which though german wants to break but is compelled not to do so. But afterall its German's taxpayer money that is being lent so how far german will keep doing this and how long the german citizens will allow this is something that is to be seen. But one thing is clear that this problem is not similar to that of US where some bailout helped. Greece, Spain, etc have to become productive, else someday German/France may land up in trouble.