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Monday, June 9, 2008

Predictions come true again - Indian Stocks nosediving


Check out my last post....when I said the Indian stocks are way over-inflated.

Well, as I write....the Sensex (Indian equivalent of the Dow Jones) has nosedived below 15,000. Check out the graph I gave last post...... It's elementary to note from such a sharp steep peak.

Well, here's the quantitative analysis :

  • Crude oil prices sky rocketting, now it'll breach $140 / barrel
  • US subprime lending problem
  • Global credit crunch
  • Inside India...rising inflation rates
  • Slowdown in domestic industrial production numbers
  • Middle East Crisis may deepen with Iran flexing up its ante
  • High inflation rates, ACTUALLY double digit (real rate, that is....it doesn't take a genious to figure out it's double digit already if one goes to the market)
  • slowdown in GDP has been reported
  • corporate earnings have fallen in many key sector year-to-year basis
  • Foreign investors are fleeing the market. Problem with most Indians is that they have very little confidence in their own stock markets.....whenever they see FIIs fleeing, they start dumping their own stuff. This is a crying shame.
  • Another big factor is - Indian Prime Minister Dr. Manmohan Singh 's hands are tied. He saved India from ruins way back. But now, political compulsions have forced him NOT TO TAKE BOLD STEPS........this may be the SINGLE MOST IMPORTANT FACTOR TO THE INDIAN STOCK MARKET TAKING EVEN MORE HEAVY BLOWS.

But I think the good news is:

The lowest level the SENSEX will go down is to 12,000. I've come to this figure inputting all the factors cumulatively. This is THE REALISTIC FIGURE.

In fact, even now, one can buy into some blue chip stocks.

As also steel, I.T. (those which depend heavily on offshore projects), pharma, banks, cement.

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