Market view for the coming week

This year we saw the first muhurat trading in the last seven years with a negative market breadth. Its more to do with the international market outlook due to the losses and write offs made by banks, financial institutions, broking and asset management companies there and the view that more such write offs are bound to happen. I had come up with an article on Sub prime in my blog in August 07 where I had a view that it’s just the beginning of the sub prime mess. (Check it out here.. I guess it’s just the beginning for the Sub prime crash & Market meltdown on US concerns)

The coming week we will find our markets in more red due to high oil prices, worries on rupee and dollar and the worry on more sub prime write off to happen in the US.
U.S. stocks are poised for more weakness next week, after a complete wash out of the hopes that technology shares might pull the market out of the sub prime mess. Concern about credit problems is spreading throughout the economy take for example what happened on Friday with IT Company Cisco Systems Inc who said that its business has seen a significant decrease in orders from banks due to the credit concerns. So its not only Banks or financial institutions but IT and other companies related to banks are in the grip of sub prime lending mess which If spreads more might not only take the US market down but emerging economies too. Take for example an Indian IT company like Infosys whose +60% business comes from US. Due to rupee appreciation they have already increased the prices for their services. Now guess what will happen if they are not able to sell in the US as banks there are totally in the credit and sub prime mess?? No points for the right answer. Let’s be underweight on IT in India for the quarter.
Though there are chances of India getting affected due to international sub prime mess, we should not forget that our fundamentals are pretty strong with expected corporate profitability of 28% for fy 08, expected GDP of 9.5%, inflation of around 4%, PE ratio for the market (sensex) to be between 20-25% (China index @ 55%) the long term outlooks seems great to be a part of.
Whatever the credit mess, we should not forget that the fundamentals for India are very strong and every fall in our market should be treated as a buying opportunity. The coming week might give us good opportunity to buy into and as I always say
Let’s Invest.

Comments

  1. Realty RiderJune 25, 2008

    Many expect a further correction in home prices in India. Since the volumes of property transactions are going down, hence the asking price for property will also go down. Additionally, over-supply of property is posing as a major reason for the slow down in Real Estate prices.Recent media reports have also suggested the same trend. Reports suggest that Real Estate Prices in Mumbai, Bangalore, Pune, and National Capital Region have corrected 15-20% in the first quarter of this year. Market-watchers say that this trend will be repeated across the Tier II cities and suburbs too. No wonder property developers are wooing prospective users with all sorts of offers. Some are even offering lower EMIs for flats while some are offering goodies like cars along with property. Still others are wavering off the stamp duty prices.
    Are the property prices coming down in your area? Is the property slow down really impacting the end user in a major way? Should the home seekers cheer for some reasons? Is there a possibility of a market dive? Or is this a temporary phase in the housing segment?For more view- realtydigest.blogspot.com

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