Friends,
The DOW closed the week up at 8280 by 279 points and similarly Nikkei at 8076 by 82, Strait at 4291 by 142, Nasdaq at 1593 by 115, Hengseng at 13655 by 379, Kospi at 1210 by 48. So this is across the world effect of the downing of the interest rates and in no less manner effect of Obama in the seat of power.
In contrast BSE closed the week down at 9300 by 127 points and NSE at 2843 by 31. This is in fact paradoxical as Indian prospects are definitely better than the rest of the world. The reason lies in two thing . First that India has to catch up with the world’s other economies in terms of interest rate reduction (next round of it is due as the the inflation at about just 5pc now and leaves room for it). Secondly there has been an ill effect of the ‘satyam’ episode.
There are otherwise possibilities of realty, metals and auto sectors reversing the trend as these are the sector which suffer most when capital flows get restricted and interest rate is not adjusted in good time.
Since the capital flows are getting alright and the interest is going to be benign , the weakness will be shed by these sectors. We have had the glimpse of the same happenning during the course of the week. Sail, Maruti and Unitech improved during the week.
The other sectors were not in such problems in the first place but do stand to benefit out of the third relief package in course of the next fortnight when interim budget on 16th Feb will be presented.
The govt has shown concern for the job market woes and will ensure that the industrial climate improves.
All in all we may be optmistic but cousiously as some quarters think that revival may take longer time. I personally believe that the recovery will be fast enough.
The domestic savings now have to judge whether to go for lower rate deposits and still pay taxes for safety reasons or to take a slight risk and get in ti equity investemnt. Which ever pocket the savings flow , the ultimate user will be corporate sector or its customer. The only thing that may come in way is the govt mopping up saving to meets its own fiscal deficit. But govt borrowing programme wil be now some time away till the next govt comes to power. By that time the things will have improved in any case.
HariOm,
krsnaKhandelwal
Panch Tattva Wisdom 