The USA market got the first shock in 2008 due to bad loans that lead to disaster, the government had to pump in USD1Trillion dollars but still it’s not out of wounds and the second shock started in European countries such as Greece and it is expected to hit Spain, Italy etc. Which also required USD1 Trillion package now after all these packages, relief funds etc. its not sure that the entire problem is solved.
The Developed market is witnessing stagnation in demand/ growth (except food articles) along with boiling Crude Oil prices which remains above $75 and the Fiscal deficit is ballooning at faster rate which at one point of time will eat economy as a whole. Another important problem is Inflation which is also not cooling of especially due to crude and food items. The Emerging economy is 100% risk and reward play but the developed economy is NOT SAFE in long run that is for sure and we do not know when Currency Dumping will start in the emerging market.
Looking at the current scenario I expect that Developed countries will require around USD5-7 Trillion and working capital of around USD 2 Trillion (Including existing Package) and it will take around 7-10 year to recover from full problem especially the USA as the financial system has completely struck hard whether Credit Card, Mortgage etc.
But Fund Managers, Hedge funds are bullish on China & India for Longer term prospective because large gap of demand and supply in these market and population is key driver for the same.
It’s expected that China will dominate world market as USD will loss its shine as and when such financial shock occur, that means may be its possible that Yuan will be the acceptable currency and most power full as whole.
In case of India it may not dominate same as china but Rupee will appreciate considerably in Long run as we can expect around USD70-100 billion (Fresh Funds) is waiting to come in our market provided proper government policy is initiated. Further at present our main problem is inflation, Demand supply gap in commodity and boiling oil prices etc. Long term market prospectus is bright but short term shock is not avoidable in any case.
However India’s share of export in manufacturing is less compare to china so if domestic consumption level is improved it will have better impact on our market, but all this is matter of time. We all know that once if a person is wounded badly it will take time to recover from such accidents in the same way is the financial market which had just seen 2 big accidents and many more may happen in developed market.
Indian Investor should be prepared to take Big & Small Crash that is why i always say that Retail Investor with small capital must avoid Speculation it will only give pain as they cannot compete with those FII’s, Hedge Funds etc.
