hedonist Said:
Credit quality good or not this country is gonna rot.
Same with the markets... irrational buying!
This is gonna be the worst drought in 50 years, but here people are buying as if India is rocking, despite a looming 6.8% fiscal deficit, the fallout of the swine flu to yet unravel & a caution on a rating downgrade.
So why the buying?
There are 2 reasons:
1) If you want to invest your money today with TOTAL safety, & get a return of only 7% after tax, where do u invest? Ans:- NOWHERE, cuz even a bank deposit giving 8% will boil down to 5.5% after tax. So where do u put yr money?? Indian Govt tells you that in order to survive and keep pace with an average rate of inflation of 8%, gambling in the stock markets or mutual funds is compulsory, to ensure you have a chance to make 7% or more. And what if as usual, the molly-coddled FII's decide to sell off someday& make a bakra out of all of us? Who cares boss, you can rot, Govt is busy playing their own games! And mutual funds have collected fokkat ka paisa from us, so dabao, they'll keep buying without fundas, unlok ka thodi paisa hai!
2) P Notes were in a limited ban and phased out by October 2007. However, unknown to many, our darling Govt conveniently permitted P-Notes AGAIN by October 2008 to appease hungry foreigners, frothing at the mouth to make a fast buck at our expense. Genuine FII's painstakingly fill in application forms as Indian authorities thoroughly check them out; But apna VIP P-Note investors with short-term money from unknown sources do not even have to fill in a medical examination form. Their broker fills it out & certifies their bonafides! Having seen the Indian election results, these dudes have now come back to India to add to their booty - by gambling money at our cost. P notes played a pivotal role in the over hyped rise in Indian markets till 2007,& in the current rise. When global events in such a fragile scenario, frighten owners of ST capital, there is always gonna be panic selling.
Posted On 8/20/2009 3:38:55 PM