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Friday, June 1, 2012

GREXIT...and other Worries





After the not so merry month of May we head into June in further turmoil.Life as a stockbroker,equities/commodities trader and even an investor is not easy at most times but these past two years have been excruciating even by the normal yardstick.

The global and Indian markets have bled every month and the issues just keep piling up while the powers that be decide whether its austerity thats required or even more stimulus to keep main street thriving.How many of us have willingly taken bitter medicine,even while knowing that it would make us better?

The muddle in Indian politics just gets more tangled with the Bengal chief minister seeming in the NDA camp as I saw the strike in Kolkata and the administration took a softline even when the BJP leadership does not know who to listen to!The Finance Minister is more interested in taking long walks in the Presidential Palace and the Prime Minister's cheif economic advisor keeps making some noises about policy action to change the laissez faire.

What effect the probable Greek exit or Spanish banking trouble will have on india I cannot predict but I do know that the valuations of a lot of firms in consumption,textiles,maufacturing and banking is going to be 'mouth-watering' at some point in June-July.The slowdown in GDP does not come as a surprise although corporate profits on average have grown at 15-18% YoY and I do not not have to be an oracle to predict that it will take a couple of quarters for the corporate results to catch up with the GDP.

Cooling of Oil and base metal prices augurs well for Indian manufacturers.We are facing a litmus test and in the months ahead there will be plenty of talk about deficient infrastructure,redtape,access to cheap funds being net negative for India and maybe a few downgrades.But if you are an INVESTOR(not trader)then good times are round the corner for you.JUST BELIEVE in the India story.

P.S.A country growing at 5% is still the second fastest growth market in the world.And the exit of Greece...or Spain...or Portugal or Ireland is not the end of the world.Greece contributes just 2% of the Eurozone GDP!