Will there be a boom in Indian Economy?

Economic growth cannot be kick started in single decision or by strong government alone. It is a collection of decisions towards the growth taken at the right time. Building or breaking an Economy may take long time. The base for economic growth, we saw in India from 2003 to 2008, was established by Narasimharao government and Vajpayee government. The base was made for more than ten years for the 2003 – 2008 growth.

UPA-1 and UPA-2 reaped the benefits of this base. Now, the economy is contracting. After an expansion, the contraction phase will follow. This contraction phase will surely take its time and its course. In this period, a strong government can only reduce the impact a little bit.

Sharing the Financial Knowledge

If an experienced person who is well versed with all investment ideas, share his financial knowledge with his colleagues, friends, and relatives, then it would be useful to them. Many doesn't aware of different financial situations in the current world. Whenever they are forced to undergo a particular tight financial situations, they get the experience. For example, if a person doesn't have a Medi-claim insurance policy, he will realize its importance only when he has spend lot of money on Medical expenses. Likewise, if a person has kids and if he doesn't save for them in the young age for their higher studies, he will put him in a financial hardship, when he prepares their children for the higher studies.

Like wise, If you don't invest in stock market or Mutual funds even when the market is dull or in bear trend, you will loose a money making opportunity in a bull market. If a experienced person, who is exposed to all investment tools, advises one person regarding these investments, it will useful for the listener. The listener is not needed to undergo a financial tight spot, if he takes lesson from the experienced person. So, young people, who start earning should talk to experienced persons to get an idea about investments for the future.

Will the growth story of China and India continue?

The Asian tigers China and India grown in the past five years more than 7 percent in GDP. It was said they are going to rule the financial world for another 20 years. But post 2008, the GDPs of these countries started climbing down and for the financial year 2012-2013, both the countries have lowered their growth. If this happens for the next three years, then their growth would as equal as other countries. Will this growth would continue.

From Stock market's perspective, China's Shanghai share index never reached the 2008 high ever after 4 years. In fact, China Index has under performed for the past 4 years when compared to other world indices. For Indian Stock Index, it has come close to 2008 high, but it has not crossed it. In 2011, it has seen a decline from the top.  

For a Economy to grow, the Stock Indices should grow. If it fails to do so, then the Economy would shrink. The GDP growth would not continue. Going by these, it seems, both countries are unlikely to have growth of more 7 percent in coming years.

Will European debt problem once again bring down the Markets?

In August 2011, all the world stock indices declined heavily and it was said that the Europeon debt crisis was the reason for the fall. But from november most of indices rallied and some index even made a new all time high.

Is the crisis over?  Are the fundamentals of the other Economies are stronger to warrant a rally? The answer is no. The Europeon debt crisis is not over. It is discounted by the market in the short term. But it is not over. It will once taunt the market.

The markets are likely to cut the last six months low in coming months. The recent rally is really a bear market rally. It is likely to be followed by big decline in another three to four months.

Are really Markets react because of Fundamental News?

There will be always good and bad news flowing in the markets. Media always highlight the news if there is any rally or correction in the market. Does really market react for these bad or good news.  when there is a correction in the market, the correction is being attributed to the bad news at that time.

But if we could see other news that came on that day, you could come to know that there were good news at that time also. But the media completely ignore the good news and highlight the bad news as the action in the market is down.

 

Likewise, when there is a big rally in the market, it is being attributed to the good news that is coming at that time. But if we check the other news, we could see some bad news also. But the media would highlight the good news, because, the market is up at that time.

When Tsunami came to the shores of most of the Asian countries, and took the lives of more than 3 lakh people, the Indian Stock Market rose substantially on that day. Normally, Market should have come down on that day for the bad news. But it actually rose.

This shows that market never care for the fundamental news. It is always taking its own technical course, irrespective of good or bad news.