Smart Investing..

In this blog post I would like to share the views of one of the investment banks on the present market scenario. After almost three years of bull run in Indian markets we have entered a pocket of introspection. Key stock indices now trade along with most global markets, at levels that last prevailed in September ’07, before the US Fed commenced its rate easing cycle. Overall market capitalization is down by 27%, in calendar ’08 and stands at levels last seen in September ’07. Key factors affecting Indian markets can be classified as Global environment – uncertainty continues to unfold The unfolding economic malaise in the US has been well articulated in various fora with the principal concerns surrounding the likelihood and the depth of an economic recession, the stagflationary environment seeming to emerge there and the ability of policy makers to engineer a smooth and swift recovery in such an environment. The sharp fall in the USD over the last few days against most major currencies

In August 2007 I had come up with an article titled “I guess it’s just the beginning for the sub prime”, this was also the time we had asked all our clients to slowly come out of equity markets in a staggered way. This was the time that we felt that SENSEX was trading at a 2009 PE multiple of close to 28 times and there has to be a correction for market to remain healthy in the long term. We were just waiting for a spark in the market and we found one in the sub Prime and credit crises mess in US markets. In December we had come up with an article titled “Emerging markets will power the world economy in 2008 so lets invest” which truly showed the power and our belief in the emerging markets. We feel that however bad the recession in the US, Em’s will perform due to the strong fundamentals and developing internal growth. Yes the short-term volatility due to lot of bad news coming from the US will make the markets range bound & in short term we also expect  SENSEX  to be trading bet