Global Markets Impact on Indian Markets

Seeing all the financial problems is happenning makes me feel that world is not as simple as we think. old correlations don’t always work. The example for this:

When Fed cut rates for the first time in Aug/Sept, our markets did a wonderful rally. What was the reason given- excess liquidity!And now Fed is on a rate cut spree and still people are talking of “inadequate liquidity”! The same markets are viewing the “fed cuts” as negative because it means more problems are in store.

Now the problem with India is that we have heard so much of “India growth story” in the last couple of years that we refuse to consider the possibility of big slowdown.Even when inflation is on a rise and RBI can’t cut rates, we remain optimistic about super duper growth. Even our FM tends to put all the blame on the “global sentiment”.

Coming back to equity markets- certainly we are in a bear territory. This doesn’t rule out couple of sharp bounces but till we consolidate and move up again,it still remains very risky.On the investment side-the world is witnessing a move to “real hard assets” like gold. With rising inflation and falling currencies, I won’t be surprised to see Gold hitting new highs in the coming times.