Sunday, April 19, 2009

Road to recovery???

Are we out of the woods now??? I'm not sure about it, but going by the laws of physics it looks the worst is over. After the months of bad news flow, even the absence of bad news is positive for the markets. So here we go, US automotive sales in the first quarter is a down by some gruesome number and the US treasury department continues to burn lots of green after the Detroit automakers and their supplier entourage for the cars no one would like to drive five years down the line.
But the government can be spared on the ground of being a mere economic agent for the redistribution of wealth. Some individual portfolio investments in the current gloom however stand out. Warren Buffett has invested in a Chinese automobile and battery manufacturer BYD thinking that electric is the future of automotive industry (People will drive something afterall…the Oracle has also secured a pillion ride in Harley Davidson). This ‘never say die’ spirit is impressive, eventually everything that goes down comes back to equilibrium.
Meanwhile positive effects of the recession back home in India are the low levels of inflation and healthy corrections in the asset valuation across industries. BSE Sensex has appreciated from their October lows to a more encouraging figure of 11,000. A lot of smart money which was sitting on the banks earlier took plunge at the lower levels. Here comes the big question, is it sustainable??? Analysts point out that India’s growth story remains intact but going forward general elections hold the key for Indian stock markets. A mere thought of SP or third front coming into power disrupts my thinking process. Keeping my fingers crossed for now. Ahem!!!

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