“Dow Theory, Indian Equity Market and near future possibilities”: some updates
Posted by dipanksaha on March 7, 2007
In the last article, I raised a question regarding possibility of Indian equity market, entering into an interim bear phase. And my alibi was Dow theory. We know, Dow theory has two faces, technical and less articulated fundamental. My finding regarding movement of Nifty50 complied with the technical criteria but I was not much sure regarding the fundamental soundness of my finding. Readers would recall that I had sidelined the fundamental issue by relying on “ average discounts everything”.
Here I would like to take reference of a news article published in “The Telegraph” named “Crisil sees a slowdown in growth” on 5th February’ 2007. This rating house is expecting easing in the pace of India GDP growth rate for the year of 2007-08. Factors behind such possibility, as they have pointed, vary from slowdown of American economic growth to global inflation of factor inputs. These incidents would potentially affect the sales or the production cost or the both in coming fiscal.
It’s too early to comment confidently on these issues. But such concern, nurtured by CRISIL, is no separate incident; few days back, former Fed chief, A. Greenspan also expressed some concerns in the same line. And that surely affected a segment of the market.
Personally, I am still not seeing any serious concern. It’s true that inflation is there and that can spoil the sentiment directly or indirectly; but in Indian case, a good and timely monsoon can change lot of the things. Tough we cannot deny, if global economy faces any blue, Indian economy can hardly escape in today’s global village.
