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dr gs sood
Season for short-lived rallies
he year 2012 started on a cheerful note, with the markets gaining ground robustly. The markets showed resilience despite a host of negative developments on the international front, including the downgrades by rating agency Standard & Poor’s, delays in talks about restructuring of Greece’s sovereign debt and lowering of world growth estimates by the UN and the World Bank. Foreign fund inflows in the New Year have been so good that the first two weeks saw more inflows than what had flowed out in 2011. The rupee has also seen a decent bounce off its lows. The possible reason for FIIs’ inflows could be the opportunity provided by the sharp decline in the rupee and the attractive valuations the market is offering at this point in dollar terms.
This may not be the start of a bull run but it only suggests that there may not be a sharp downswing either. That foreign investors are still optimistic about the Indian economy is proved by recent FDI inflows. Also, despite much concern, the Indian markets did not witness any significant pull-out by the FIIs. This was perhaps due to the fact that we are already at the Sensex level of around 12,000 in dollar terms. The share of FII investments in emerging markets like India is still small compared to their global portfolios. They have to increase their share of investment in countries that are going to grow much faster than the rest of the world......READMORE