Tuesday, March 27, 2007

 

India stock market update 27 March 2007

The Indian stock market has been meandering for a few days now; and there is a lot of thought about what a future course of action could be. There is prominent Guru Marc Faber of the Gloom and Doom report reports that he expects the Indian stock market to decline, and for the US market to actually out-perform the Indian stock market. There are a couple of points that make me unsure whether this is a realistic portrayal.

1. Indian industry is still growing at a good clip; and after a few murmurs after the Budget, almost everybody has quietened down.
2. There has been a lot of buzz about liquidity drying out, but a lot of this liquidity is supposed to have been sucked out of the system due to interest rates increase in Japan. These interest rates hike in Japan and the US will be reduced if the Central Banks start feeling that the economy is again slowing down. This is a cyclical process. In fact, hedge fund money is starting to find its way in India, and this is a lot of high-risk money, which means that it can quickly come in and out.
3. Over time, it seems that the rate of investment in equity (even through Mutual Funds) is slowly starting to rise, and this augurs well for the market.

I am still cautiously optimistic about the Indian stock market, and have steadily been investing for the last 1 month, taking a risk that I can think will pay off this year.

Stocks that I am currently tracking:

1. India Cements: Rs. 163
2. Nirlon: Rs. 52 (more risky)
3. Yes Bank: Rs. 146
4. Bajaj Auto: Rs. 2,525
5. Reliance Capital: Rs. 662

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