The Sensex is poised to drop by another 15 % to 13500 in the next 45-50 days and will bounce back by mid-October. This is because of the following multiple events:
1. The nation-wide anti-corruption movement led by Anna Hazare has put the Government of India in a very cautious mode. Too many scandals for GOI to deal with. No major decisions will be taken till the politicians sort out their problems.
This has a direct impact on the energy, infrastructure and real estate sectors - all typical growth sectors.
2. The global slowdown is already affecting the software, BPO and IT industry.
On account of 1 & 2 above, the Foreign Financial Institutions (FIIs) who dominate the Indian stock market are exiting from India at a record pace.
This down will last till the last week mid October and the markets will bounce back by then (around Diwali which is a major festival in India). In short, the next 3-6 months will be a rocky ride for investors in India. The longer term story on India (3-5 years) is still intact and investors who invest for longer periods should expect returns of at least 18 % per annum.
posted by sekhar @ 10:22 AM
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