Market-ing The Stimulus

Seven Hundred And Eighty Seven Billion Dollars ($787 Billion) has been the amount of money that has been poured by Barack Obama and his new economic team into the US economy. It’s an unprecedented stimulus package in an unprecedented time. Barely minutes after Barack Obama signed his first stimulus package into law, had the American bourses on Wall Street shrugged of the development as though nothing had happened. The Dow Jones had once again closed in the red despite the massive amount. The precedent for the rest of the world a day later has been observed. Here in India Dalal Street is wondering if the 9000 level on the Sensex that has been so difficult to maintain will be broken into the 8000 levels. It could happen in just one trading session.

The stimulus package in the United States is in no uncertain terms an American one alone. It’s something that bears high expectations of restarting the world economy. The amount that was passed as said earlier is a massive one. Combined with the earlier spending of 700 billion dollars by George bush, the stimulus amount has already crossed 1 trillion dollars.

But is this enough?

Wall Street expects more, in fact it expects much more. Dalal Street on the other hand is hoping that the Sensex stops being a rag doll that keeps getting flung about by traders. The investment climate is at an all time low and the mood is somber.

Just a few hours ago GOLD reached a record Indian high. As an asset class gold is without doubt the most potent and preferred investment by Indians. Worldwide prices of gold too are at a high. Considering the amount of money being poured into gold, the notion of the yellow metal being a ‘safe haven’ has only been reinforced.

The World Gold Council is grinning from one ear to the next and with the climate expected to be like this for some time the price of gold is expected to surge.

For India, a stimulus package is necessary if not for core sectors then definitely for sectors directly dependent on the American economy like outsourcing and exports.

The first two stimulus packages unveiled by the government have not had their desired results. In fact it has taken a massive amount of time for them to merely penetrate into the various sectors they’re intended for.

The equity markets on the other hand have become selling markets. The selling pressures on the Sensex and the Nifty have only become more active after the dismal interim budget. Every time a particular stock rallies traders immediately activate their ‘SELL’ buttons undoing the value of the stock.

Employment needless to say has become one big giant headache. An Indian stimulus package in the next few months might become inevitable. With the general election looming it is perhaps in the incumbent government’s best interest that people do not continue to lose their jobs.

At the end of the day the average Indian is worried about his own economics, not that of the rest of the world.