Cinderella story-indian equity market story

Cinderella story



In the South East Asian crisis of 1997-98, when the so called tiger economies of Malaysia, Thailand, and Indonesia meet financial trouble, they fell from grace. They were shunned by the international investment community as pariahs. India self congratulated itself from escaping unscarred from this crisis. But India was never part of the high growth story of these countries. It was like when guests to a party fell sick because of overeating and a person uninvited to a party is saying, see how strong I am. I have not fallen sick, unmindful of the fact that he was never part of this party. But in the present global equity boom, India is a lead player as part of the B.R.I.C. countries (Brazil, India, Russia, and India). And as in the Cinderella story , when the party ends and everything beautiful and shining turns into rats and pumpkins, similarly Indian equity will have to fall drastically AND THEY HAVE, if there is a collapse of global equity markets. Danger signal are there –U.S. sub prime crisis, crude at $100/bareel, over speculation all across the asset classes, declining commercial vehicle & two wheeler sales in India, stagnant four wheeler sales –ignoring new model launches. I.P.O.’s are massively oversubscribed of cos. which do not have any running- leave aside profitable –operations! No body in his wildest dreams would have thought a few years before that Sensex would cross 20,000 !- not even the biggest fan of India But that is why Einstein had rightly said that imagination is more powerful than knowledge. Even after huge gains and massive wealth creation, people were not willing to call it a day and book their profits and sell overvalued equities till the crash of Jan2008. Like a drunk intent on finishing the bottle irrespective of the consequences. As the Oracle of Omaha –Warren Buffett- the third richest person in the world- says, be fearful when others are greedy and greedy only when others are fearful.

pandita.errohit@gmail.com