Bull markets work the best when doubted the most
Posted by | Posted in mofsl , mosl , motilal , motilal blog , motilal oswal | Posted on Wednesday, June 02, 2010
In the back drop of the European crisis, I expect that world recovery will lose some momentum in 2010-11 but I do not anticipate that the recent turmoil in the markets will derail the global upswing. The implication for Asia is that the regional rebound will slow rather than stall and it remains likely that growth will stay far higher than elsewhere. Accordingly, Asian central banks will be focused on inflation. Policy rates will move up further and most countries will be nearing the end of their tightening cycles well before rate hikes even start in the US and in Europe. Finally,I would like to forecast that Asian currencies and stocks will end FY11 stronger and higher than where they finished in FY10.
In India, Q4FY10 has most certainly climbed following a weak Q3 which was caused by a slump in agriculture. In coming quarters, I expect that GDP will continue to climb at a 8-9% q-o-q annualized pace, even as fiscal stimulus measures are pulled back. There is very little spare capacity and corporate profitability is strong. Private investment should pick up while industrial output and consumer spending should be supported by ongoing infrastructure improvement projects, rapidly rising household incomes and increased bank lending
The Government is committed to cutting the budget deficit. The fiscal shortfall and the overall level of government debt at 82% of GDP remain quite high. Nonetheless, financing problems are unlikely. The prospects of continued high nominal GDP makes debt ratios manageable . The liabilities are also overwhelmingly owned by on-shore institutions. This means that India especially is not vulnerable to shifts in foreign investor sentiments . In addition ,the 3G license auction which generated almost double the target and the equivalent of around 0.5% of GDP, has also made the government borrowing programme less daunting .
I remain very firmly bullish. Bull markets works the best when doubted the most. With interest rates closer to zero and expected to remain so in the developed countries around the world for years, there is a limit to which equity markets can fall. Every correction should be used as a buying opportunity . Real estate stocks should surprise most analysts on the upside . Just wait and watch
Hello Sir,
I am a big fan of you and Ramdev. I closely watch both of you. Its really been nice to share your view through blog. Its long awaited, hope Ramdev will also start (or I am not aware).
A well said article sir. Saying "Bull markets work the best when doubted the most" should be taken as financial proverb the same way that of Warren Buffet's famous quote "Be fearful when others are greedy. Be greedy when others are fearful". I simply Love it and it worth more then thousands of articles debating on "Bull or Bear phase".
Only thing, which I would not support, and let me say again support by heart not by Fact and figures, is your prediction on real state stocks prices. The reason is these people and companies have acquired lots of land and now they are blackmailing consumers. They are the group Of Netas + Land Mafias + Gundas. They made a affordable home a dream to a middle class person.
Though I like few people in this space like Adi Godrej- Godrej Properties(I love entire Parsis community, they are people with most humility left, I write about them in my blog). You know sir, few day back a Business News Channel asked as their Project in Abad is in great demand, are they (Godrej)going to hike the rates? First, personally I did not like the question but anyway we have to bear with limitation of these people. You know what Adi Godrej replied? I watched very keenly. Adi godrej too seems not happy with the question. He replied- "We already have good enough margin at this project, so if demand is high, we will increase supply. Why should we increase the price?". And thats the reason I love and respect These people.
Don't you think sir, if we can not do anything to keep a tab on these so called real estate builder, at least morally we can put some pressure on them. Let say by "Not buying stocks of these Mafias". And we can support people like Adi by buying their stocks, properties or at least by dying our hair :) (Godrej hair dyer is market leader ). Or at least by supporting them morally and by spreading their commitment to world by writing on blog.
I would love to hear some thing from you.