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Thursday, June 11, 2009

India: Sustainable? Or False Hope?

FN: The India 30 Sensex (BSE) has rallied from a low of 7697 to 15168, or 97%. Bringing prices back to the pre-blow off top highs of 2007. In September of 2007 the index went parabolic even as the S&P 500 peaked around 1575. Hot money flowed out of North America and Europe an into emerging markets, pushing them to new highs on the ridiculous "Decoupling Theory".

Are things really good enough right now to warrant the very high prices of 2007? Global trade is still collapsing... just look at Japan and Germany.

Japan Economy Shrank 14.2% Last Quarter on Exports (Update2): "Japan’s economy shrank less than the government initially estimated as business investment and inventories fell at a slower pace.

Gross domestic product shrank at a record 14.2 percent annual pace in the three months ended March 31, less than the 15.2 percent reported last month, the Cabinet Office said today in Tokyo. The median forecast of 23 economists surveyed by Bloomberg News was for a 15 percent contraction."

FN: Despite a new, market friendly government the euphoria in Indian equities seems quite a bit overdone.


Anonymous said...

Business friendly gov or not, Indian markets are looking like becoming the ultimate graveyard for many international investors and local Indians who beleive the utter tripe that India is an imminent economic superpower.
The BRIC propaganda/nonsense is getting to India's head.
SENSEX is a good long term buy at a minimum of 30 percent below the recent multiyear low. INR is overvalued and a major exporter risk.
One last thing: Indian higher ed system and product is extremely, unashamedly overrated. Any sufficiently huge population in a nonrepressive political system is going to do what India has done lately to impress people. I say India is overrated.

tulsatime said...

in the words of an infamous superhero sidekick, 'holy vesuvius batman, that thing is gonna blow!!'

Thanks for pointing out the next seismic event, looks like it will be a whopper!

Anonymous said...

Anon #1: "any sufficiently huge population in a non-repressive political system..." - yes, history contains many examples of this...wait a it doesn't. You're referring to the 20th-C. USA? or what?

springbok said...

Anon #2:
I don't get why you are picking on that statement by Anon #1.
The USA was not the only large population without a despotic regime in the 21st century.

Anyway, I get their point anyway.
I'm sure living in 18th or 19th century USA was still preferable to today's India.


springbok said...

Just in time...
Read this opinion backed by some interesting facts.

Many who are "bullish India" better get the hell out of their armchairs and actually go there.