Watching the Indian financial networks lately is better then watching the latest comedy flick. The talking heads are just trying to say something positive but the reality is there is nothing to say. My favorite was on Friday when an HSBC analyst said “inflation could hit 15% but growth should not be impacted much.”
Are you kidding me? Current inflation is 11.42% (a 13 year high) and for it to rise to 15%, that’s a 31% jump. It’s like saying crude going from USD 140 to 183 is no big thing. Even today, growth is getting affected and if inflation does hit 15% it’s definitely going to dull the “India Shining” story.
Luckily not everyone is so brain dead, an analyst from a local broker had the following rare gem: “Why would a US fund manager buy ICICI Bank, when he is getting a Citi or Merrill a lot cheaper?”
One of the big growth stories for the past 3-4 years in India has been the rise of automotive component manufacturing companies. However, with the slow down of the US automotive market all 3 companies (Chrysler, Ford and GM) are all getting taken to the cleaners. Last week GM’s stock hit a 53 year low, I would imagine the guys over in Detroit aren’t ordering as many parts as they did last year. So much for the “decoupling” theory that was being tossed around a couple months back on TV.