Indian Stock Market: Rising On…Hmmm…Just Rising

Are investors in India back to de-coupling as a theory?  Certainly the continued rally in our markets suggests something…what could it be?

1. Earnings visibility?  NOT
2. Earnings Growth? NOT
3. Economic Growth? NOT; see the following articles:

Need of economy booster package in FY’10, too - Montek

More uncertainty; if the administration knew the extent of stimulus required why not move forward with it?

Next year to be more challenging - RBI

RBI Governor Duvvuri Subbarao said the outlook for India and the world remained uncertain and the path of the global crisis and its resolution remained unclear.

“The year 2009-10 will be more challenging than the current one,” he said.

Hard to imagine a more challenging and punishing year than 2008. Mr Subbarao is not out to instill confidence, however, I agree with him.

Could it be a time of Global economic stability?  NO. See the following articles

Global Economy sinking in to severe 2009 recession

Besides this link, I have earlier posted the IMF and World Bank forecasts along these lines.

Germany is already collapsing

The German economy is on the “brink of the abyss”, says the IMK institute in Dusseldorf. The country’s GDP could contract by 3.5pc next year.

We are reaching depression levels here.  Germany and China have become addicted to exports. This is not as healthy as it looks. They will bear the brunt of belt-tightening by the Anglosphere Club, and East Europe.

Global trade is shrinking, fast

China’s November trade data (a 2.2% year over year fall in exports; a 17.9% year over year fall in imports - see Andrew Batson of the Wall Street Journal) suggests that global trade is contracting quite rapidly. And since trade accounts for a rising share of global activity, it suggests that the global economy has stalled - and perhaps is contracting.

France expected to slide into recession in 2009

Japan cuts interest rates as recession deepens

In its assessment of the state of the world’s second-largest economy, the Bank said that conditions were now “deteriorating.” Just last month the Bank had described the economy as “sluggish.”

So, the Indian market is up on selling exhaustion…and forgetfullness…markets are great teachers.  I think there must be a lesson being taught…the denoument is the ‘experience’…some things just cannot be taught, they must be experienced.  Expect a sharp fall in markets in the next few weeks.

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