Business Daily from THE HINDU group of publications
Monday, Jun 02, 2008
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Business Daily from THE HINDU group of publications Monday, Jun 02, 2008 ePaper | Mobile/PDA Version | Audio |
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Stock Markets Markets - Outlook Columns - A Ringside View
Surging inflation coupled with foreign institutional investors’ selling affected the sentiment at the Bombay Stock Exchange. The BSE Sensex tumbled 1.47 per cent and the NSE’s S&P Nifty by 1.55 per cent. - Suddenly, growth in agriculture is being promoted as a home-grown solution to the adverse impact of global slowdown. Rain god willing, it could help market psychology to turn after June 15. Some in the market have begun to take satisfaction from the undefiled support levels on the Nifty and the Sensex in the last few weeks. But, for this week, punts appear to be placed both ways. Some feel sellers are likely to be restrained with rupee falling and commodities correcting a bit. Others apprehend more negatives would pop up for the economy managers, which in turn, may sour the market mood further. The consensus is that market may not be able to take a dramatic directional call in the short-term. Investment rotation among sectors in tune with emerging developments and day trading would obviously continue to provide sustenance volumes. Some strategists still suggest gradual accumulation for long-term, but on the floor, investors of all hues appear to go in for a temporary self-imposed abstinence of sorts. Even the deep-pocket investors, do not appear to be driven by first-mover instinct in an uncertain time. Roller coaster yearTextbook economics teaches correlation between stock prices and inflation as well as an inflation-hedging function for stocks. But are we heading for a demand-pulled inflationary scenario or is it cost-pushed stagflationary situation that may eventually dawn on an election year? Cost-pushed inflation has narrowed both corporate margins and the volumes for real. The rest of the goings on is still unclear. Can the effect of monsoon, the RBI, Government measures and the CSO’s revised estimates (or hopes) counter the negative impact of gyrations in the global financial markets on the local economy and the equity market? Despite headline growth numbers expectation remaining high, 2008-09 may prove to be a roller coaster year of the economy and the corporates. Past experience and performance may not quite help in deciphering the next few quarters. In this scenario it is not surprising to see long-term investment tactics are dominated by application of a powerfully strategic tool of wait-and-watch. This is why market is not even catching on a negative momentum. (Responses may be sent to jayanta_mallick@thehindu.co.in) More Stories on : Stock Markets | Outlook | A Ringside View
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