Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Of "Asian" flus and global cues... - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Mar 5, 2007

    Of "Asian" flus and global cues...

    With no "bottom" after the 10% decline over the past fortnight, the Indian markets are at it again down 3.2% as we write! Indian equities are seemingly having a case of the Asian flu: benchmark indices in Japan, Singapore, Malaysia, China and Taiwan have just closed in the red (see graph below). These markets, in turn, are taking the "global" cue from a 1% decline witnessed in the US markets on Friday.

    Fears of an economic slowdown in the US, China's proposed leash on speculative domestic capital and the realisation that the Indian economy is in an 'overheated' mode, have seemingly shaken investors belief whether the Indian stockmarkets, after a 4-year dream run, are actually a pretty 'risky' place!

    A slowing economy....
    We shall reiterate what we have been saying with respect to the economy overheating and the hanging sword of rising capital costs globally (and in India). We believe that there is a high probability that the Indian economy will slow down as the RBI is (correctly) determined to keep inflation under control by increasing interest rates and slowing demand.

    ...does not change our view.
    Well, we are not surprised by the attempts by the Reserve Bank of India (RBI) to slow the economy! We continue to believe that the Indian economy will grow at a rate of 7% to 7.5% per annum on a long-term sustainable basis. We continue to believe that earnings of India Inc. will grow at 15% per annum on a long-term sustainable basis. So do not get confused about the noise that will be created over a slower growth rate in the US economy or by the selling of FIIs that may cause the market to decline shaprly (as it did in May June 2006).

    Focus on your portfolio, and your ability to take risks
    The effect of a slowing economy will vary by sector: capital goods companies will possibly see a slowdown in orders; but technology companies may not be affected. However, the global decline in stock markets may see a further sell-off in Indian share markets. But do not let these near-term swings and "bull" and "bear" markets rattle you. There is a way to be immune to all the noise about the Asian flu and global cues. The smartest and most successful investors in the world tend to ignore such volatility and always invest with a long-term perspective they are never concerned about the daily movements in stock prices

    The events of the past week should have given you ample reason to reassess your portfolio exposure. The specific stocks you own (click to read our view on large-cap and mid-cap stocks) or the mutual funds you own (meet a Personalfn representative) must have a risk-return profile that suits your financial goals and your risk-taking ability. Never gamble in stocks and mutual funds, always invest rationally.



    Equitymaster requests your view! Post a comment on "Of "Asian" flus and global cues...". Click here!


    More Views on News

    How to Ride Alongside India's Best Fund Managers (The 5 Minute Wrapup)

    Jun 10, 2017

    Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.

    How To Read Your Mutual Fund Account Statement Correctly (Outside View)

    Aug 17, 2017

    PersonalFN simplifies the mutual fund account statement for you.

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process) (The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    Which Gods Will Bring Down the US Empire? (Vivek Kaul's Diary)

    Aug 17, 2017

    Mr Trump is in the White House and the gods are in their heavens; what's not to like?

    Will They Haul Off Trump's Statue, Too? (Vivek Kaul's Diary)

    Aug 16, 2017

    All across the country, the old gods become devils. New, gluten-free gods take their places...

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 18, 2017 12:16 PM