Markets in 2008 & The Year Ahead

Expert Views : Markets in 2008 & The Year Ahead !

By Dinesh Thakkar CMD, Angel Broking

“The year 2008 was terrifically challenging for our markets, and events dampened investor confidence when portfolio values diminished with the capitulation of prices. Therefore, we will greet 2009 with considerable scepticism. However, this is not the only time that intrinsic value, which emerged after the market carnage, has been tested. Clearly, this value will impede any further declines due to slow growth in corporate earnings.

A review of the 2001 era as well as other global recessionary phases confirms that bottoms were considered when “gloom and doom” ran rampant, but these phases were succeeded by bull runs. The current sentiments and valuations are similar to those from 2001 yet that year was followed by the largest bull market, which produced a sevenfold increase in the Sensex.

History demonstrates that recessions ultimately yield to resurgence, but this reality is always doubted in troubled times. For growing economies—particularly India’s—the writing is on the wall: growth will return. By lowering the interest rates and providing fiscal stimulus, the RBI and the government have set the wheels in motion, which should revive demand and consumer spending in our under-penetrated markets.

Soon, corporations will regain their velocity as profitability returns. They will resume investing and generating new employment, thus creating demand for their products. The coming year will allow us to re-live our experiences in wealth creation and multiply our returns on the bourses; it represents an opportunity waiting to be seized. Hence, rejoice; happy days are around the corner.“