Vol. 6- Issue 6 - Sept 2012
STOCK DOCTOR
dr gs sood
Stock-specific approach
MOST
investors are baffled at the continued rally in the markets as concerns
relating to the economy do not seem to be receding. So, the question
that is uppermost in the minds of everyone is, why are the markets
rallying, especially when the economy is floundering? The explanation
put forth by some for this continued rally is that the downturn in the
economy appears to be bottoming out, there is the Chidambaram effect
that comes with high expectations of reforms and the expected release of
liquidity by the European central banks, which are better known as QE3
(quantitative easing round 3). However, these explanations may not hold
much water, if one looks at the fiscal mess that the economy is in, the
current political scenario, and the failure of QE1 and QE2 to herald a
bull run.
The
only reason that appears to justify the current rally is the liquidity
brought in by FIIs, for they see India as being amongst the few oases of
growth, one which promises vibrancy in a scenario where other countries
appear to have given up the growth path. What appears to be driving
FIIs is the theory of relativity. They see more things bad in their own
economies compared to India. Also, the Indian market offers the most
diversified basket of stocks across sectors and corporates.....READMORE
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