Thursday, April 2, 2009

Is the worst over for Indian markets?

If the trading of the last two weeks is anything to go by there are some cheers for the investors in the Indian stock market. The Bombay Stock Exchange is trading more than the psychological barrier of 10000 and the Nifty has crossed 3000. These may be statistical data to many but they are moral boosters to people who have their money invested in the market or are still willing to put in there.

Let us look at some of the positives that have happened in the last few weeks. Firstly comparing quarter to quarter the markets have closed in the green first time after the Oct-Dec '07 quarter. This after going south continuously for all the four quarters in the disappointing 2008. Rupee has appreciated against the dollar over the last one month which means imports have become cheaper.

The low prices of the crude oil in the international market has meant that inflation has considerably come down. But what's scary is the chance of a extended deflation period like the one that Japan went through in the 90s. To a layman deflation might sound good but for an economist its more dangerous than inflation and kind of a cancer to the economy.

The biggest hurdle for the markets is to get back the confidence of the investors after they burnt their fingers in the last fall. Many of them were small and first time investors who had put in their savings. Many of them novice to share trading had put in money and fuelled the upward thrust in the market last time. It will be a little tough toe get these people back to investing and in large volumes.

One big concern for the industry leaders is the upcoming General Election. With the uncertainty that looms over the current political scenario in the country markets may behave strangely till the next government takes charge. Also the Left Parties forming a grand alliance is a worry for many industry leaders as their policies may work against the speedy recovery of the Indian economy.

But all in all we might just be seeing some light at the end of the tunnel. Aiming for a 21000 now will be foolish but in a market scenario like today even cutting down on losses is like making profit. Scaling 10000 again has been a huge moral booster. We can hope this brings in some confidence among the investors. We might just have left the worst of this fall behind us.


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