Is BSE at 7500 possible within 1 year ?

[Venkat123]

This one is going to put the middle class on fire sale.

 

[Czar]

Hey Rao are you by any chance referring to the H&S in monthly for this conclusion ? do you follow technicals ?

 

[raosrinivas]

Hey Rao are you by any chance referring to the H&S in monthly for this conclusion ? do you follow technicals ?

Fortunately I do not follow any technicals, i look at economy as a whole and just gdp, inflation , most importantly asset to cash flow ratio , most people do not think about it, but a when they are buying a house they could calculate the P/E ratio for it. all assets will correct to correspond to their cash flow eventually.

i have seen with my eyes all these happening in east asia in 97,98, so that experience is put to use. the biggest bubble in the history i think is "tulip mania". we have moved into bubble zone starting 2004-2007, so i am expecting that it takes atleast 4 yrs to play out. many people will think, real estate will come back if they wait for a couple of years, they call in consolidation. it will never happen, and it will take some time to break their illusion of resilience.

i try to mark to market data, instead of opinions. just think if the GDP is 1.2T at last years dollar rate 40, now 49, so we lost 25% of that and add 7% growth to it, so many people do not realise that we are already in recession in $ terms, and our gdp could be less than trillion as per today's data.

it is my rough estimate that real estate will play out in 4-5 years, but if banks face liquidity problems, then it could play out in less than 2-4 years.

 

[raosrinivas]

It is only 3 days back, that i have written about this.

http://www.traderji.com/equities/12250-bse-7500-possible-within-1-year-3.html#post234294

The resilience of indian stock market surprises me the most. it has surprised me so many times in the past, that i have come to expect the surprises and am no longer surprised by it.

i should admit that, inspite of expecting a surprise , i am again surprised by it today. i have a feeling that SBI, UTI, LIC owned MF's are giving a golden parachute to FII's. i will see look for data later.

 

[raosrinivas]

We are trying to make our problems looks like international problems. We have almost negligible exposure to subprime, so we should not be effected in any way but we are used to borrowing and speinding foreign money, that when the tap is closed we are blaming them. The decoupling has already happened, we might go our way down to realistic levels even if the DOW goes up.

Regarding the DOW, there is a good pattern in the DOW/NASDAQ. Hedge fund redemptions are forcing the funds to sell stocks and other investments, and since the redemptions can generally be made only at the end of the qtr for most funds and at the end of the year for some funds, there is a heavy selling during qtr ends. Jan lows stabilized to again fall in mar/apr, and again in jun/jul, and sep was the worst of all months. so it is time to look forward to december. my guess is november will be "all is fine month".

Exchange rate tells more stories than all the story tellers on CNBC, NDTV, all all the other channels put together.

 

[raosrinivas]

Long back when i started this thread, i said over the long term stock market will trace the gdp growth that's the reason for the number that i put here, it is a proven theory put forward by economists and we are no different. some ignorant people on this forum have attributed that theory to me. at 7% gdp growth rate is not possible for India given the infrastructure. of course we could rig the figure by letting inflation run at 11% and growing at 7%. a real growth of 5-7% is the best case for any country with 2% inflation and 7%gdp growth.

In the US there is a good feedback mechanism built into the system, if you are sitting on $350,000 house and your neighbour's house is sold for $300,000 then sales data is in public domain and your house is immediately $300,000, so it will play out 2-3 yrs, in india since such a mechanism is absent it will play out between 4-6 yrs. my Rs50/$ prediction has been correct, i am surprised that it happened so fast, 7500 will be correct, we will be in the 5-7.5k range for years.

 

[Venkat123]

Wait till Obama comes to power and puts together protectionist policies in the US. You might have to change the titile.

 

[lalpar]

Fortunately I do not follow any technicals, i look at economy as a whole and just gdp, inflation , most importantly asset to cash flow ratio , most people do not think about it, but a when they are buying a house they could calculate the P/E ratio for it. all assets will correct to correspond to their cash flow eventually.

i have seen with my eyes all these happening in east asia in 97,98, so that experience is put to use. the biggest bubble in the history i think is "tulip mania". we have moved into bubble zone starting 2004-2007, so i am expecting that it takes atleast 4 yrs to play out. many people will think, real estate will come back if they wait for a couple of years, they call in consolidation. it will never happen, and it will take some time to break their illusion of resilience.

i try to mark to market data, instead of opinions. just think if the GDP is 1.2T at last years dollar rate 40, now 49, so we lost 25% of that and add 7% growth to it, so many people do not realise that we are already in recession in $ terms, and our gdp could be less than trillion as per today's data.

it is my rough estimate that real estate will play out in 4-5 years, but if banks face liquidity problems, then it could play out in less than 2-4 years.

Hi rao,

Do u mean the indian Real estate will see a drastic slowdown for next few years!!!

 

[shrinivas]

This kind of Thread when pops up ,it actually gives me relief ( i am more of a bull) becoz it signifies we are nearing a bottom in coming days.

Ahhhhh...Ashish,my dear friend,no relief this time...Markets coming down mercilessly.....When I read this thread,I recall that the levels of 12000 were never thought of..and today????

ganeshhity

 

[Venkat123]

ganeshhity,
At this point they should just close the market and go home for a few months.