ARE THE BULLS REALLY BACK

The decoupling theory which was introduced by some one before the sub-prime crisis in 2008 was went for the toss, when the Indian economy also suffered by the global recession. Now the Indian markets are ending in green from the last week and showing consistency but the European and the US stock markets are not showing such a great chance of revival.Is the decoupling theory persisting ? or the common views of analysts saying that its a election rally in the Indian market.

Global events are directly linked to the economy each and every major news do discount the market today or tomorrow. Be it the G20 sub mitt or the major chapter 11 bankruptcy filing by the MNCs. The Indian markets are up and when a finance guy want to know why they are up no body has the answer for the rally. Analyst has given a name to it saying its a election rally. Being in the market I always have a appetite to know the reason behind rise and fall of the market.

My friends are ringing me up and asking me Is it the correct time to enter in to the market ? I told them there is no correct and no wrong time to enter in to the market , its the script which you are buying has more importance rather then going gungho about the market. I still believe that the Indian capital market are very much in efficient they could be moved up and down by cartelisation. In the end Its the retail individual who is the sufferer . I don’t know where will be market after the elections or in the coming 1 year. I only remember one thing said my professor that to enter in to the market the loss born by you is the fees charged by the market . In market no body lose money neither the other one gain, Its only the transfer of wealth from one individual to another.

THE TALE OF TWO CENTRAL BANKERS

Economy always passes in different phases could be classified as the boom phase, the downside or the burst  phase . Central bankers are the key players in the economy with limited power in their hand.

Alans Greenspan and YV Reddy are credited with far greater power then they ever had and with responsibility for outcomes largely beyond their control. Central bankers actually have  very limited tools and hence limited powers.

Reddy in India understood the risk of bubble better than Greenspan .In the era of Greenspan the major collapse where the tech bubble, Long term Capital Management. and now the biggest ever financial crisis of all times. His successor Ben Bernanke along with US treasury Tim Giothner rebuilding by pooling finances in the US economy .

Reddy made several efforts to squash the bubble in the year 2004-2007 by raising the repo rate from 6% to 9%  which stopped banks from lending for urban purchase and increased the risk weightage to real estate.

Comparing the two economy US investor could buy $100 worth of shares with only $33. The Sensex gained 700% for the period 2003-08 and US housing prices rose 55%.

Mr Reddy deserved all praised for calibrated opening up rather then resisting to liberalization. Even after bubble recognisation central bank can’t do much.