Once a sanguine country it seems INDIA is moving to a zone of uncertainty. The uncertainty is about the economic condition, Inflation, profits of companies driven by corruption, attempts of global recovery and foreign investor having bad experience at INDIA. A recent survey that concluded India to be most over regulated country and poor infrastructure apart from 7 cities is INDAI is finding it difficult to be an economic aphrodisiac anymore. Despite having an increased per capita income that touched $1000 marks (Rs 46,492) India has seen its propensity of consumption decrease to 0.6 resulting in many MNC wondering what they should do to make INDIA consume more.
The mood is evident from the recent slump in INDIAN Sensex. Sensex fell by 10.6 % in month of January, 2011 and slipped to its lowest since Oct 2008 to a figure of 18327. Weak global market and anti-government protest in Egypt is being attributed to be major factors along with common concerns about Inflation end below expected performance of key companies like Infosys. One of the major reasons that can be added to this is dip in FDI by 26 per cent during January-November 2010 to about USD 19 billion from USD 25.5 billion in the year-ago period.
The market that was rising like a star has slumped like anything. One may wonder why this sudden mood of change. Why FDI is dropping down and why all of a sudden there are doubts about us. I read economic times regularly and found various notions suggesting two entirely different view points on INDIA. When BofA/ Merrill lynch suggested that sensex will remain flat; Goldman Sachs take is that Even as some investors are turning their backs on, and high inflation emerging market will manage to attract investors. In totality we are confused what’s next for us.
I read once that many investors found it difficult to cope up with Indian infrastructure. As a result few investors are still keeping their finger crossed. Recent CITI bank fraud, Satyam embezzlement has lead one to wonder will corruption engulf INDIAN private sector as well. No wonder Sensex is diving down.
I am wondering whats next. I will try to make a prediction and comeback.
P.S : Dubai market fell 6% cause of anti-government protest in Egypt and market across the world is reflecting the sentiment.
confused is the word !!
ReplyDeletevery crisp article btw ? its hard to see a direct correlation between egypt unrest and markets in Dubai ..cos Dubai is not dependent on Egypt for oil and natural gas .. could it be possible that fall was due to something else
The Reason for fall is not oil and natural gas. The Reason lies in investor sentiments. Most of the people invest in market for short term return. Egypt is a developing economy and so is Dubai and India. so any major ripples across those will reflect in all share market across the world. Last week saw overselling of many shares in India cause of protest in Egypt.
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