Niveshak June Issue

Sunday, June 28, 2009 , Posted by Team Niveshak at Sunday, June 28, 2009

Frustrated with bad financial news for about three quarters, most of the part time & wannabe investor of our street had lost track of the Sensex. But somewhere between spring and summer, quietly and unmourned, bad news vacated its dominating position on the street and allowed a glimmer of hope on the world of hazy finance. Some say that this glimmer of hope is just a feel good factor, too tentative to measure, a faith without validation or just a flash in the pan. But to the rescue of optimists, comes none other than BRICs specialist Goldman Sachs which again predicts that India would be soon jump into the 8% growth zone.

The Congress led UPA government came back to power with a clear mandate and without the shackles of the Left. Prior to that the Indian share market indices had seemingly bottomed out and the Sensex was moving out of sub-10,000 levels to nearly 12,000 mark. If you do not want to believe in the hyper volatile share bazaar, you would surely believe in increasing sales figures of automobiles, steel & cement. The slight improvement in the Industrial Index of Production also brought in some cheer to investors and citizens like never before. Some pessimists believe that this meagre improvement is just a play of numbers and there has been no real recovery yet. A handful of Index figures were blamed to have been calculated on a lower base that prevailed for most of the times last year. To make this statement clear, we can consider the Inflation figures. Even though food prices have skyrocketed, Inflation figures fell down to sub-zero levels after thirty one years. That may seem paradoxical. These die hard pessimists also say that the markets may have been buoyed
up by manipulated figures and a correction is inevitable within a month. But they forget that within a month we have the Budget coming up in which the old warhorse, Mr.Pranab Mukherjee will not leave any stone unturned to justify the faith that the Aam Aadmi has showered on them.

We also have our share of pessimists in our editorial board who try to dig out the reality from the speculation. May be they are desperate to throw a word of caution. Our Cover story for the month carries a detailed analysis of a host of Indian and Global factors to justify that this glimmer of hope is probably not the first light of the sun. There is a short article on what issues must Mr. Mukherjee touch upon in his budget (and further) to make this recovery for real and get India back the tag of the fastest growing economy of the world. The issue of Negative Inflation, as described above, as well as the bankruptcy of one of America’s iconic brands-General Motors have been briefly discussed. We have also covered articles on MiFID, Outsourcing of Finance & Accounting
functions and The Godzilla that ransacked the Wall Street. In this edition, we have tried to derive some key learnings from some of the greatest Derivative disasters of all times. As we hopefully move out of the sub-prime crisis, we will try to answer if the present (or hopefully past) financial turmoil was a market or a policy failure.

All the evidences of economic recovery may be only anecdotal evidences. A few more dots will appear soon. We will happily join them to create the picture of the desperately awaited perpetual BULL. Enough of Optimism. Now get us some real good market news.

Make the Street happy for real reasons.

Team Niveshak

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