Friday, March 14, 2008


India stock market update 14 March 2008

These have been absolutely horrible times for investors in the Indian market and world-wide. Markets scaled their peaks in mid-January 2008 and have been in a disaster mode after that, with bad news all around. The sub-prime mess in the US market, although predicted, still led to a major fall in stock market indices that markets are still trying to recover from. Further fears of a US recession are spooking the market further, and causing further falls.
The Indian market has also collapsed along with the world markets, with a fall of 25% in markets in a matter of a few weeks. There are few good stories out there, and the budget did not exactly set the market on fire. It was known that this was going to be a populist budget, and so it proved. And to make matters worse, the budget increased short-term tax, increasing it by 50%. This has also impacted the market. And there is still not too much clarity on where the funds for the farm loan waiver program are going to come from.
Stock markets operate on fundamentals, but also on sentiment to a large degree. And sentiment remains negative, with not much hope of improvement. However, every finance book that you would read recommends contrarian investment logic, and it is only at such times when everything is negative that one should start to think about investing. Invest in small amounts, in fundamental mid and large caps that have good fundamental values, and invest for the long term. Inspite of the decrease in industrial production growth, India is still growing at a good rate for the long term and is a good economy to invest in.
No specific stocks to be recommended for this week, hold onto what you have.

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