– The sufferings of the Aam Aadmi continue. The latest jolt to the common man comes in form of diesel price hike of Rs.3/- hike of Rs.2/- in kerosene prices and LPG cylinder would now cost Rs.50/- extra. On one hand the public is suffering under the pressure of high inflation and on the other, the job opportunities currently are so bad in the country that a person cannot be confident his income will rise enough to beat the inflation. The country is suffering due to the almost paralysed government. There is not one credible decision which the economists led government has taken in last many months and the effect is clearly seen in the markets.
– So what would this diesel price hike do now? The estimate is that there would be an immediate price hike in the freight rates by 5% – 7% which in number terms means a hike of anywhere between Rs.3700/- to Rs.55000+ on a round trip between Delhi and Mumbai for a nine tonne lorry. So expect inflation rates now to move up further from the existing number of almost 10% which is just not willing to come down.
– Infact one novice investor recently enquired with us if he can buy inflation! Though a serious matter, inflation remains to be the only figure which is stable!
– It’s now quite evident that the common man is going to be under further pressure and it is also known that, since the freight rates are going to move up the inflation index is also going to shift northwards. Is this inflation “Consumer Driven” ?? Absolutely No! but we don’t understand why RBI thinks so? If the central bank hikes the rates any further from the present ‘already absurd’ levels due to ‘fuel price’ driven inflation, we are sure people will completely loose the respect for the Economists.
– One economist doesn’t even speak, remains cool and calm even when rampant corruption happens right under his nose and on the other hand, other economists have been hyper active in increasing the rates even after experiencing that rate hikes alone cant bring the costs down.
– The global situation also remains critical. The PIIGS countries remain critical and there are signals that the next problem can be Russia. The silver lining is that US Fed sounded little better this time and said that the country will grow but at an slow pace.
-At one point of time India saw a huge capital outflow since investors started assuming that the US markets look better and safer than India as growth may happen finally. The other factor was due to the deteriorating faith of the FII’s in the Indian government due to the lacklustre governance.
– We in our last article had mentioned that 17500 – 17280 remains to be very critical level for the Sensex. The same was posted even on our facebook page. You can read the article “Few Words on Market…” by clicking the ‘Print Articles’ link under ‘Categories’
– VRIDHI now has a facebook fan page and the same can be viewed at http://www.facebook.com/teamVRIDHI/ (Don’t forget to click the ‘Like’ button on the page)
– On the day of the Mauratius Tax treaty scare, the market went and hit a low of 17320 which was very close to the lower range of our mentioned level of 17280 and bounced back with a vengeance. We hope we don’t retest them again since the fundamentals at these levels look attractive. In case we break the level and trade below 17280 for few days then technically we can easily test the levels of 15950 – 15650 on Sensex.
– Most of you must be aware that VRIDHI is very active in creating awareness and is actively involved in training people in stock markets. We have just initiated a separate website www.FinancialTraining.co.in , we request you all to visit the same and give us your valuable feed back. The site is not yet complete and hence we will be happy to incorporate suggestions.
– The rally we saw on Friday was on back of value buying on account of falling crude prices. We don’t expect similar kind of moves as there are many investors waiting on the sidelines to sell and say bye to the markets. The market continues to look attractive for longer term investors and hence choose the best quality stocks.
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