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Indian Stock Markets – Mantra for 2009


Indian stocks have given the second highest return among the four BRIC countries after Russia during the month of April. Further India has attracted a cool Rs.7,000 crore in equity investments from foreign portfolio investors in this month. Improving global liquidity and the resulting rebalancing of portfolios by FIIs is said to be the cause of this move back to emerging markets in Asia, especially China and India.


However, this enthusiasm for Indian equity is not being shared by domestic institutional investors. The recent rally is being viewed with scepticism. They seem to prefer waiting for the poll outcome.


The true depth of the U.S. credit crisis will become much clearer next week with the release of results from government stress tests of the nation's 19 largest banks and their capital needs. The results are expected to show that the 19 banks must raise possibly $150 billion or more in fresh capital. The banks being tested include Citigroup, Bank of America, JPMorgan Chase, Wells Fargo and Goldman Sachs. Together, the 19 banks hold two-thirds of total U.S. bank assets.


Despite positive happenings over the last few weeks, we do not believe that the worst is over. The recent rally and buoyancy in markets all across which are being witnessed should not be taken as signs of economies reviving. The true test has just begun and this year is bound to be volatile as economies struggle against unemployment and recession to set right the flaws.


So our view would be to proceed with caution.



This article is written for InvestmentYogi by Lovaii Navlakhi, Certified Financial Planner.

Published May 08 2009

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