Market Update on 21.08.08

All that glitters is certainly not GOLD. Nothing would explain this better than India’s present Economic Story.Though for the past few years people have been raving about India’s Growth story, Not everything seems hunky dory over here .A lot of factors have a spiraling effect on the Inflation Index.The entire market is suffering from this fear that inflation is rising much faster than expected and would continue to do so for the next few months. People expect Inflation to move upto 15 % sometime in October or November 2008.Moreover, they fear that thanks to the increasing trend in inflation, Central Bank will further tighten its monetary policies to bring down inflation. However, this would result in money becoming dearer and the interest rates for borrowing money will go up.THE Bombay Stock Exchange (BSE) Sensex fell 2.96% on Thursday . That is lowest in the past three weeks. This was mainly caused by banks fearing Tightening of Monetary Policies.. Investors are also not feeling to comfortable in the given scenario. They are feeling shaky as their stocks have dipped in terms of value. Moreover the oil prices that had dipped last week has also started increasing.. Crude Oil Prices coupled with rising Inflation is crippling the entire economy. Inflation remaining high is an all time worry for all investors. Moreover the number is also supposed to increase in the nex tfew months The BSE index fell 434.5 points to 14,243.73, its lowest close since July 29, with all but one of its components falling. The benchmark is down almost 30% so far this year, with foreign funds net sellers of more than $7 billion of stocks. India’s biggest import- Crude Oil has also risen to more than $116 a barrel after Russia expressed its discomfort over the US POLAND pact. Factors like, increasing oil prices, increasing inflation, increasing interest rates would result in hampering the growth rate of India. The MArket Scenario is as follows ““Largest bank State Bank of India (SBI) dropped 7.1 % to end at Rs 1,342.25, its lowest since July 29, and second-ranked ICICI Bank slid 5.2% to Rs 643.10. HDFC Bank, the third-largest, dropped 5.8% to Rs 1,166.35, the most since July 29. The bank sector index fell 5.2%. Outsourcing companies dropped on concerns about demand in the United States, where they earn more than half their revenue. Sector leader Tata Consultancy Services (TCS) slipped 2.6% toRs 817.75 and second-ranked Infosys Technologies shed 2% to Rs 1,665.45. Largest listed company Reliance Industries (RIL) fell 1.4% to Rs 2,212.35. The refiner has delayed the export of at least one gasoline cargo and cut liquefied petroleum gas sales due to a problem at its fluidised catalytic cracking unit, oil trade sources said on Wednesday.” Maybe all is actually not well with the economy.On one hand people expect the market to go bearish and hence resist investing . On the other hand only a few believe it to bullish and think it’s the right time to invest.