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Stock markets are interesting places.

They never behave as
forecasted. There are more people making a living by telling others
what to do out there than actual people who invest. Simple proof
that no one has got the grip on it. Since evolution.
If you go through the archive of expert forecasts for our markets,
the estimation would vary between 27000 to 35000 on the Sensex
by the end of this calendar year. Now, stock broking houses are
changing their forecasts, as if they never made an earlier one. The
new range seems to be 22000 to 27000. They are here to make
noise and to get the public to keep buying. They know that every
once in a while they need a new set of believers as the first lot get
ruined and swear off the markets. This vicious cycle of conmanship
goes on uninterrupted.
The point is that the Index, whilst being a misleading thing, is also a
barometer of investor sentiment. In a way it impacts investor moods
and makes them bearish or bullish. No analyst or research house will
be heard if he says that he “ does not care where the market goes,
but here is an investment opportunity in a stock that I have spotted.
I think it is of a company with a great future and available at a
reasonable price. Etc and so on.”
Alas, the markets
global investors of
the other. They do
instances because

are now driven by institutional investors and
whom many invest only through some index or
not make a real impact on the market in many
their buying the index is often a self fulfilling

If we look at the Globe, most places are facing an economic
slowdown. The growth engines are slowing down. The reckless pace
at which consumerism grew, is coming down. In every country, the
political leader is finding new ways to destroy the finances with
more and more freebies. The problem is that many of the large
economies are now burnt out cases. Most of them produce far more
than what they need. So, they have to export. Exports are shrinking
as each country tries to protect itself. It is an irony. Inward looking
countries are likely to remain more stable over the next ten years or
more. Every ‘developed’ nation seems to have built up a ‘high cost’
economy, where everything is expensive and nominal wages are
going higher and higher at a frantic pace.
India has a peculiar problem. We make what we want and consume
what we make. With one notable exception- Oil. And this is more
than offset by the inward remittances that flow from our NRIs. But
the Oil deficit is the principal cause of worry, apart from the
exploding population, which will perhaps need a natural disaster to
be set right. Till then, the resources India has, cannot feed the
moutns it has. Many of the products that we consumer are costed in

I would focus on companies. In a way. for now. I will. Another twenty percent correction and perhaps we become attractive. it is best to keep these thoughts in the back of our mind. so long as the rest of the world is in trouble. durables. Large companies shares are getting corrected as the FIIs start to head for the exit or at least take back something to show to their investors. before making our shortlist of investment opportunities. Circling back and forth. the disparity is extreme as opportunities are rather limited. Putting in a new Chairman or CEO alone does not count for anything. banks.155) are all contributing to increasing the lifestyle aspirations of over a billion Indians. the urbanisation. It is creating a wonderful opportunity to add some large caps. Even if the owner is not the best. As an investor. And the Indian retail has just warmed up and that money is still flowing in to mid caps. They are rudderless and unless there is one big write off and recapitalisation. I will still keep away from the banks. Prefer the “Make in India’ and “Sell in India” companies to the “Make in India” and “Export from India” companies in the medium term. Even a zero growth for a couple of years may not be a bad think for any economy. automobiles. the risk reward is in favour of putting some part of the asset in to these kind of plays. whereas the income is in rupees. Will it shrink? My view is no. where we rank a lowly no. things are terrible. The other interesting set is from the PSUs. but guess labour arbitrage plus domestic opportunities will make some companies attractive. But do not wait for a precise twenty. combined with the exit of the owner. Our stock markets have not corrected enough at all. they will make the right noises and talk up the share . Will our economy grow at five percent? Probably yes. There is simply too much uncertainty out there. pharamceuticals etc. we will find ourselves coming back to sectors like FMCG. Keep the noise and the ‘sensex’ out of my head. So there is a gap that keeps getting bigger. And yes. Yes. Where we can see this billion people spending and buying. Unfortunately.dollars. In PSUs. the penetration of communication (not just internet. Personally do not like the sector. IT is a conundrum. keep away from companies that export or earn in foreign currency. Start buying at ten or more. Keep looking for those sectors where government policies are enabling a return to profits for companies in sectors like Petroleum. Will it grow at eight? Most probably no.

For them a one or two percent interest swing is not going to make a huge difference. Right now. if there is a margin contraction and earnings drop. sales and earnings. but I doubt if there is going to be any big change structurally. So. would lower your EMIs and give you some extra spending money. An interest rate cut of a decent magnitude. Yes. maybe we could buy. an interest rate cut would be the end of the bull case for the market. I do not think that quality companies in India are going to shrink. Take advantage of the crowd behavious and the noise. The markets also react in the short term to interest rate signals from the Central Bank. keep your focus on high quality Sept 29th. 2015 . Am I worried if there is a global market correction of twenty percent or more? Not so much. it will give a push to housing demand. global slow down and India’s apparent insulation due to benevolent oil prices on the OUTSIDE and a big struggle for earnings growth on the INSIDE. I doubt whether by itself. It is the poor risk and the highly leveraged ones that depend on bank loans. The bigger issue is not one of interest rates. If they come to attractive levels. High quality borrowers get to borrow at below the bank interest rates from other sources. In all this noise and panic. There are other factors like commodity prices and global contraction that are driving demand. they may present buying opportunities. R Balakrishnan (balakrishnanr@gmail. at best. Government has to get out of driving the banks. the market is caught between a black box named China.prices.