X

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.
Asian markets, India's economy & more - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Jun 10, 2008

    Asian markets, India's economy & more

    Asian markets hit by a roadblock...
    The Asian economies (including India), which until some time ago were basking in the limelight led by buoyant stock markets and robust growth rates, are now beginning to lose steam. Surging oil prices, rising inflation and input costs have started to weigh heavy on the economic growth of these nations. Stagflation (inflation combined with slow economic growth and rising unemployment), which is expected to cast a spell of gloom on the US economy, has not helped matters either.

    Jobs data released last Friday reported the US unemployment rate posting its steepest one-month rise in 22 years. These developments seem to have spooked foreign institutional investors, as the International Herald Tribune states - "Institutional investors, who have relatively long time frames and large portfolios, are losing patience with Asia, where underlying inflation is at its highest since 1991." Weakness in the stock markets is ample proof of the fact. Monday saw major Asian indices shed around 2% with India seeing a fall of 3%. These developments are definitely going to test the mettle of central banks with no easy solutions.

  • Investing in inflationary times

    ...and continue their freefall
    After yesterday’s bloodbath that saw major Asian indices shed around 2% with India seeing a fall of 3%, today has brought yet another round of freefall for the former (key Asian markets). Currently, while Chinese stocks are trading 5% down, those trading in Hong Kong are witnessing a 4% decline. Fears of a widening global credit crisis (following substantial losses reported by Lehman Brother yesterday) and rising borrowing costs have spooked these markets. Vibes coming out of the US Federal Reserve, which suggest that the central bank of the world’s largest economy is planning to target inflation (thereby indicating higher interest rates going forward) have also played spoilsport for the Asian indices. How do the Indian markets react remains to be seen.

  • Worried about falling stock prices? Read on...

    What's in store for India?
    India is beginning to feel the heat too. Inflation has been steadily climbing upwards and has breached the 8.2% mark with forecasts that the same is likely to hit 9.5% by the end of the year. The RBI is having its hands full at the moment trying to counter inflation without stifling growth, which is certainly an uphill task.

    Earlier, when inflation was well within the RBI's comfort zone of 5% to 5.5%, the problem was the sharp appreciation of the rupee, which was fuelled by FII money pouring into the country bolstered by the strong growth in India's GDP. The tide seems to have turned now. India's acute problems of a burgeoning trade and fiscal deficit have once again come to the fore, consequently putting a downward pressure on the rupee. Further, rising crude prices do not seem to have made any significant impact on the government, which is reluctant to do away with subsidies.

    The solution of issuing oil bonds to oil marketing companies (OMCs) is only expected to worsen the fiscal deficit further. Add to this the farm waiver loans to the tune of Rs 710 bn and the scenario looks grim. With elections due next year, these are indeed testing times for the ruling UPA government, which has caught the ire of the common man (due to rising inflation) and the Left (due to the hike in petrol and diesel prices).

  • Impact on OMCs of recent fuel price hike

    Reducing carbon emissions
    While soaring oil prices are wrecking havoc on economic growth of various countries, the same is expected to have an impact on the environment as well. As reported by the International Herald Tribune that gas quoted statistics from the International Energy Agency (IEA), investments totaling US$ 45 trillion might be needed over the next 50 years to prevent energy shortages and greenhouse gas emissions from deflating global economic growth.

  • As you sowed carbon...

    The IEA has stated that emissions of carbon dioxide are expected to climb 130% and demand for oil is likely to rise by 70% by 2050. Rising crude prices would lead to countries switching to coal, which though less expensive is very polluting. The agency has outlined two broad measures to reduce carbon emissions. One is using technologies that improve energy efficiency and reduce emissions from power generation. The second measure involves equipping more than 50 natural gas and coal power plants every year with equipments to capture carbon dioxide, having 32 nuclear plants each year, increasing the number of wind turbines by 17,500 annually, developing solar energy and biofuels, the latter particularly from sources that do not compete with food for farmland. Whew! A Herculean task indeed!

     

     

    Equitymaster requests your view! Post a comment on "Asian markets, India's economy & more". 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.

    Why Hasn't Warren Buffett Rung the Bell Yet? (The 5 Minute Wrapup)

    Aug 22, 2017

    It's surprising Warren Buffett hasn't warned investors about the expensive stock market? Let us know why.

    Think Twice Before You Keep Money In A Savings Bank Account (Outside View)

    Aug 22, 2017

    Post demonetisation, a cut in bank savings deposits rates was in the offing.

    A Darkness Is Spreading Across the US (Vivek Kaul's Diary)

    Aug 22, 2017

    Today, we are attacked by one preposterous thing after another, each of them even more absurd than the last.

    Dear PM Modi, India is Already Land of Self-Employed, and It Ain't Working (Vivek Kaul's Diary)

    Aug 21, 2017

    Most Indians who cannot find jobs, look at becoming self-employed.

    More Views on News

    Most Popular

    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.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    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.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    More
    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

    S&P BSE SENSEX


    Aug 22, 2017 (Close)

    MARKET STATS