Overview
The recent
correction in the Indian Markets has had most of the Industry experts baffled. The markets had
in past one month declined sharply. The momentum the market was enjoying seems to have taken a breather. This was despite the fact that the earnings season started with a bang and major
Industry stalwarts announcing better than expected or in line with expectation results.now have outperformed the Industry score card. The revenues as well as profit growth have been outstripped in growth as compared to the Q1 FY06 results.
The Indian Market returns in a Global perspective all in the same boat
The Indian Markets
correction can be appreciated better if we take the
performance of some of the major world markets in perspective. This is because Indian Markets today no longer are totally insulated by global events. Events like the Hurricane disaster in US as well as the Crude oil price rise and China’s berserk growth stories have all added their own impact on to the Indian markets too. After all we are all in the same boat when it comes to tackling issues like terrorism, regional disturbances,commodity prices etc.
The Performance of World Markets
During the past few days the sensex has been going down along with other emerging markets. Foreign investors have pulled out funds out of equity market due to various reasons inclusing the rise in US
The Downslide isn’t only local
The BSE sensex wasn’t alone in as far as witnessing a downslide during the period. Mirroring the trend we find a similar downslide in the Global markets too. Amongst the developed markets, Hang Seng Index of Hong Kong fell by 0.9 percent, South Korea’s Kospi declined by 1.4 percent, Taiwan by 1.3 percent and Tokyo by 1.67 percent on a weekly basis.
While comparing the Global emerging markets,we find that the trend of fund outflow has been evident in the past few days over several growing markets too. The Brazil market declined by 6.3 percent, the Taiwan market by 1.3 percent and the Mexican Market fell by 3.0 percent over the week. In comparison BSE Sensex fell by 1. 6 percent as on market close of 21 October 2005.The prime worries are the slow economic growth and interest rate hike in the US affecting growth.Investors are also concerned about the weaker rupee and high interest rates that could affect the Indian market performance.
Harking back just a few months back we see that Indian markets had been the toast of the major world markets globally. While The Hang Seng index of Hong Kong had de-grown by 1 percent and so had The FTSE 100 by an equal amount. S&P 500 had declined by 5% and Mexico market had also declined by 4 percent. In sharp contrast Brazil and Indian Markets had grown by about 10 percent each during the 3 month period. Hence we see that Indian Markets had been one of the best performers over the three month period. With this fact in retrospective, one feels that the current correction though sharp, still keeps us on very positive and healthy levels.
Conclusion
Last week’s correction that we witnessed hence was not an isolated phenomenon and we see that the trend had found echo in the global markets too. Whether we are in for another correction or at the start of altogether new rally only is a matter of opinion and that only time can tell. Opinions are a dime a dozen in support of either stands. We have seen the market’s phenomenally good performance till now. The big fall has come after a sharp rise of over 800 points in September 2005. Prices are falling now but we believe a correction is good for the market. The macro economic indicators are well in place. The real GDP registered a robust 8.1 % y-o-y growth in Q1 FY06 due to a buoyant growth inmanufacturing and Services of 11.3 % and 12.4 % growth respectively. Considering the above webelieve that though the correction has been sharp, it will only help in strengthening the market
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Disclaimer:
This publication has been prepared solely for information purpose andd does not constitute a solicitation to any person to buy or sell a security. While the information,contained therein has been obtained from sources believed to be reliable, investors are advised to satisfy themselves before making any investments. Kisan Ratilal Choksey Shares & Sec Pvt Ltd., does not bear any responsibility for the authentication of the information contained in the reports and consequently, is not liable for anydecisions taken based on the same.