Tuesday, January 3, 2012

>YEAR 2012: Where do we go? “Panic - Consolidation - Rally”


2011 been a rather difficult year for the investors.
■ A volatile year domestically and globally as well.
On global platform - From Tsunami in Japan, unrest in Middle east, concerns on slowing US economy and emerging market growth to survival of the Euro region. Along with sharper than expected rise in inflation in the emerging markets prompting higher interest rates.
 ■ On domestic front India has its own concerns which made it one of the worst performing economy. Concerns like a) inflationary pressures b) sharp rise in interest rates c) policy inaction by the government d) decline in Indian rupee e) widening fiscal deficit f) corporate governance concerns g) slowing demand and growth h) corruption issues.
Our markets have corrected almost 25% from the yearly high of 6181 levels in Jan 2011.
■  Emerging markets saw $47 bn outflow in 12 months. For BRIC countries the decade ends with a record outflows of $ 15bn.
■ Break down of Euro currency which is currently trading at its yearly low is a concern.

2012 – A year of Dawn or Dusk..??
Beginning of 2012, a challenging year for global as well the domestic economy. The start for the year, first 3 months will see lot of events lined up.
■ To start with most of the rating agencies will declare their rating for European countries. The biggest event to be watched for.
On domestic front the elections lined up in 5 states will come up in Feb- Mar-2012 which will set the tone for further step by the government.
■  Elections will be followed by Budget 2012 which is expected to be a populist one as it would be the last budget before the 2013 elections. As 2013 budget will be mainly on election expectations and results.
 ■ Q3 results also will start off from Jan 2012 and with other events like budget and election, reforms will take a back seat.
Lack of reforms and initiative from the government will continue to hamper the overall growth for the economy.
More downgrades from the brokerages may be witnessed.

To read the full report: YEAR 2012