The consensus opinion on where the stock market is headed has changed a lot in recent months: Confident bullishness has given way to more circumspection. High time, too.
The global economy is now running into strong headwinds. The price of oil seems to be headed towards $150 (Rs6,435) a barrel. Inflation has jumped across the world. And the credit crisis—lest we forget—has not been overcome. This is close to a perfect storm and one that will test both the resilience of many economies and the ability of those who oversee policy.
And what about India? This newspaper was neither convinced of the brave leap of the Sensex beyond 21,000 nor was it impressed with the claims of the late and unlamented decoupling idea. Matters have turned worse since then. The fiscal deficit is at alarming levels. The current account gap is a growing concern.
India has long-term strengths. And very good companies, despite a drop in earnings growth. But this is a time for investors to wait and watch.