Someone emailed me yesterday and asked “why does your blog have such a negative angle on India?” Part of me wanted to just tell the person to read the headlines and tell me what they see. Americans always get blamed for not knowing anything about anything outside of the United States. Many Indian’s suffer the same fate, they don’t care what’s happening in the world financial markets - wrong attitude if you invest in Indian stocks you better give a damn about global macro events.
Let me run through some headlines over the last 48 hours:
- IndyMac 2nd largest bank failure in history
- Lehman down 75% for the year
- Fannie Mae and Freddic Mac down 80% for the year
- Oil hits $147, highest recorded price EVER
- Dow drops below 11,000 - first time since Aug 2006
And some Indian headlines:
- Infosys down 7% after announcing flat revenues (this is India’s tech bellwether stock similar to Cisco)
- S&P might cut India’s investment grade rating
- June air traffic down 15% (GoAir down the most at -33%)
- Industrial growth dipped to 3.84% lowest in six years (it was 10.59% last May)
- Inflation at 11.89%
- Sensex dives 456 points on Friday
- HCL Technologies suffer forex losses of $65-75 million (the dreaded yen carry trade?)
3 responses so far ↓
1 Nalin Jain // Jul 16, 2008 at 7:45 am
$2-3 Trillion was taken out of the market during the burst that followed the dot com ascendancy in 1999. Took us over 3-4 years to recover. The mortgage meltdown by some estimates has denuded $3-5 Trillion; but this time the impact will reverberate around the globe as fancy hedge and financial arrangements daisy chained banks and FIs world-wide. Recovery from this mess may take take longer, potentially 8-10 years.
Economy maybe a bummer for Asia, North America. But we are seeing an unprecedented flow of cash into the middle-east as oil scales new heights. The ensuing buying spree will perhaps alter more than just the ownership of marquee brands and landmarks
Ignore the temporary blip of ‘feel good’ that likely will occur around election. Oil and the financial crisis are packing a 1-2 punch. I am not a pessimist, but there is so much more downside before we change course.
Good luck to us all (yeah, do consider moving 401k and IRAs into less risky CDs, bonds, and likes especially if your approaching retirement)
2 Suresh // Jul 17, 2008 at 9:25 am
That’s a lot of numbers on the downward slope.
May i know your opinion on the Oil Speculation?.
BJ
3 Gautam Kshatriya // Aug 16, 2008 at 8:14 pm
What’s the point in moving to bonds if we’re seeing inflation at such high levels? Surely it’ll just amount to capital erosion?
Gautam Kshatriya
gautam.kshatriya@moneyvidya.com
http://www.moneyvidya.com
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