America’s fresh allies

Bloodbath, mayhem, carnage, whitewash – you say anything, but perhaps none can truly describe the plight of people remotely connected with the Indian stock market.

The avalanche of downslide came all too sudden, and no holes in any corner remained that could house the scared investors from hiding. The claws of mounting losses bit hard, just too hard.

But there was some consolation for the harried investors – of brotherliness, of camaraderie. For, all the major stock indices world over wore the same desolate picture, except maybe FTSE.

I wrote on Saturday last that my friend Srini feared that the Sensex would see 17000 soon. Little did I realize that his forecast would become true in just 2 trading sessions.

So, where are we headed?

The turmoil notwithstanding, experts believe the ‘India story’ remains intact even though there are indications of US economy sliding into recession. That possibility is not without ground.

The year-end commerce between the thanksgiving and the Christmas just gone by has been singularly unimpressive in the US. This is taken as a tell-tale sign that all is not good in that great consumer-centric country.

The fear is further compounded by the Fed’s dramatic 75 bps reduction in US credit rates, the biggest one-time rate-cut in nearly 2 decades.

A common refrain is that if US economy sneezes, there’s no way the others will not catch cold. These ‘others’ are those countries that perforce depend on the performance of US economy.

There is also the view that Indian economy is least dependent on US, and so in the long run there won’t be that serious a problem for us even if the US falters.

That may indeed be true. The Sensex recovered a lot of lost ground in today’s trade, though it would be wrong to take this as an indication of return to normalcy.

Most stock experts opine that the volatility of stocks will henceforth be a regular feature. However, the common wisdom is that even if the short-term indicators look bearish, the long-term outlook of Indian stocks continues to be promising.

Let’s raise a toast to that – a half glass maybe to reflect the somber mood!