I wrote this in November:
Obviously there could not have been a bigger "sucker" call and my technical and market timing skills leave a lot to be desired. :(
But if I say, the call went wrong on the timing front then do I still stand by the call of a big market fall? Read on....
Lot of things have happened in the last month or so.
- Rupee touched 54 in December, but we had a big rally back to around 50 today.
- Markets bounced back with a vengeance. FIIs have bought quite a bit, not only in the equity markets but the debt markets as well.
- European problem seems to be dragging on, though the worries seem to have subsided a bit.
- RBI has come out with a CRR cut to boost liquidity.
Those look like a lot of positives.
Rupee appreciating is a positive for FIIs buying into the Indian markets. It adds to their dollar returns. But while INR has appreciated in the last 4 weeks, what I find intriguing is that forex reserves have continued to head down in the same time frame.This is despite all the FII inflows.
Rupee appreciating is a positive for FIIs buying into the Indian markets. It adds to their dollar returns. But while INR has appreciated in the last 4 weeks, what I find intriguing is that forex reserves have continued to head down in the same time frame.This is despite all the FII inflows.
European problem may have taken a backseat as far as the equity markets are concerned for the time being, but by no stretch is it being close to getting resolved.
RBI cut CRR, boosted liquidity, but also for the nth time warned the government to control its fiscal position, which looks to have completely haywire.RBI has already done Open Market Operations (OMO) to the extent of around Rs. 70K cr, and the system is still short on liquidity.
So there are positives around but fundamentally issues have not been resolved and are not close to being resolved either.
With all this as a background, I find it difficult to build a case for a sustainable rally in the market. In fact, the shape of the corporate balance sheets in India makes it even more difficult to imagine a bull run.A lot of cleansing is required to build a good base for the markets to head sustainably higher.
So as of now, I continue to maintain my stand. (Hopefully I will NOT end up with egg on my face yet again!!)
- Stock markets will find it tough to rally from here. They might have just finished a big bear market rally. And they should be headed substantially lower from here.
- I had written this on the USD-INR equation
USD-INR
Most the "Drivers below 52" seem to have worked in the last 4 weeks. I will not be surprised if the "Drivers above 52" start making their presence felt.
I finish here. Hopefully I will be able to have a little more confidence when I write next and that is possible only if I get these calls right!!
Wish me luck!! :)
RBI cut CRR, boosted liquidity, but also for the nth time warned the government to control its fiscal position, which looks to have completely haywire.RBI has already done Open Market Operations (OMO) to the extent of around Rs. 70K cr, and the system is still short on liquidity.
So there are positives around but fundamentally issues have not been resolved and are not close to being resolved either.
With all this as a background, I find it difficult to build a case for a sustainable rally in the market. In fact, the shape of the corporate balance sheets in India makes it even more difficult to imagine a bull run.A lot of cleansing is required to build a good base for the markets to head sustainably higher.
So as of now, I continue to maintain my stand. (Hopefully I will NOT end up with egg on my face yet again!!)
- Stock markets will find it tough to rally from here. They might have just finished a big bear market rally. And they should be headed substantially lower from here.
- I had written this on the USD-INR equation
USD-INR
Most the "Drivers below 52" seem to have worked in the last 4 weeks. I will not be surprised if the "Drivers above 52" start making their presence felt.
I finish here. Hopefully I will be able to have a little more confidence when I write next and that is possible only if I get these calls right!!
Wish me luck!! :)
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