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| Cheer up, all is well ! (227) 26-Jun-08 22:41 | Tracked by (4) |
| | Posted by:  Robin Swami on ( 26-Jun-08 22:41 )
| Rating  | | All is well! Don’t give up hope!!
The rising commodity prices, inflation and political opportunism is threatening to break Indian Investor’s confidence. We have reached a point where the sentiments are at the door step of entering the “Zone of Pessimism”. At this juncture we would like to encourage the Indian Investors not to loose heart.
One should not forget that high growth is accompanied by inflation and India’s growth pace and increasing prosperity is the cause for global commodity price rise. What is fuelling the speculative rise is the rapid rise in consumption of oil, food and metals by a growing economy of one billion people – India. So that is a reason to cheer about, dear Indian Investors.
Next let us see if Inflation, which has hurt sentiments, thanks to opportunistic politics of allies and opponents, has hurt growth or not? I first go by what I see with my eyes rather than what I hear or read. There are no signs of slow down in consumption by the burgeoning Indian Middle Class or the upcoming lower middle class. Neither my friends nor I, or any one reading this message have cut our spending habits. The Q1 numbers also does not suggest any slow down.
I feel the GDP rate will be fabulous because the high commodity prices will support the agri sector. The growth in agri sector will more than compensate for what I as cyclical slow down, taking India closer to double digit rate in a year or two! Remember majority of Indians have something to do with agriculture and inflation will soon prove a boon to the rural public. Their profits are going to soar. This rural boom will kick start the next round of self enhancing growth cycle. Remember the first cycle started in nineties with the IT sector bring in the dollars into the country.
The correct sensex level should have been 17500. Till sentiments soar to bring the markets to true value, investor can take “arbitrage positon” in factful news driven stocks. Infact this was Warren Buffet’s secret weapon. I will write about it sometime later.
Two stocks fall into the category, both spotted by my dear friend V K Patni. One is Spice Tele which has run up from RS 27 to current level of 72, with limited upside at present levels. Other one is GHCL which is yet to take-off. While taking arbitrage position we see factors like certainty of the news, downside potential and fundamentals of the stock. We will file a detailed report soon.
Happy investing in Indian Equity markets with tons of returns!!
Do not look to the east or west, stay focused and invested in India – the younger and brighter India is rising!!
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