Market experts advise investors caution
It’s a mixed bag for Dalal Street. While the economic growth rate of 9% in 2007-08 was good news for the market, the news that the rate of inflation continues to hover around 8% has certainly dampened the mood.
By TNN |
It���s a mixed bag for Dalal Street. While the economic growth rate of 9% in 2007-08 was good news for the market, the news that the rate of inflation continues to hover around 8% has certainly dampened the mood.
Most market participants believe the fate of the market will be decided by how delicately the government and the Reserve Bank of India strike the balance between the inflationary pressures and the economic growth. What makes most pundits throw up their hands is the uncertainties in the global market, including soaring crude oil prices in the international market. Crude was trading at around $126 per barrel last week.
���It remains to be seen whether we will be able to sustain the growth rate. The rate could be arrested by many factors such as higher interest rate. The tighter monetary measures are already showing results. The interest rates have started to firm up,��� says an equity analyst . He points out the move by State Bank of India, the largest bank in the country, to hike interest rates on fixed deposit last week as the proof. ���Most small banks take cue from SBI. Now, they are likely to raise rates���both deposit and lending rates. Higher interest rates are always bad news for economy and the market.���
So, what should be your strategy? ���Be a little cautious. Don���t jump in and out of the market at will. If you���re entering the market now, be patient enough to wait for a year or more,��� says a prominent broker in the market. He reasons that the market is likely to go through a volatile phase, considering the uncertainties hovering on the horizon. He also adds that in such an event, demand from foreign investors is likely to fall once again, keeping the market in a tight range.
Courtesy: http://timesofindia.indiatimes.com
Most market participants believe the fate of the market will be decided by how delicately the government and the Reserve Bank of India strike the balance between the inflationary pressures and the economic growth. What makes most pundits throw up their hands is the uncertainties in the global market, including soaring crude oil prices in the international market. Crude was trading at around $126 per barrel last week.
���It remains to be seen whether we will be able to sustain the growth rate. The rate could be arrested by many factors such as higher interest rate. The tighter monetary measures are already showing results. The interest rates have started to firm up,��� says an equity analyst . He points out the move by State Bank of India, the largest bank in the country, to hike interest rates on fixed deposit last week as the proof. ���Most small banks take cue from SBI. Now, they are likely to raise rates���both deposit and lending rates. Higher interest rates are always bad news for economy and the market.���
So, what should be your strategy? ���Be a little cautious. Don���t jump in and out of the market at will. If you���re entering the market now, be patient enough to wait for a year or more,��� says a prominent broker in the market. He reasons that the market is likely to go through a volatile phase, considering the uncertainties hovering on the horizon. He also adds that in such an event, demand from foreign investors is likely to fall once again, keeping the market in a tight range.
Courtesy: http://timesofindia.indiatimes.com
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