SCENT OF A BEAR !!! (WITH APOLOGIES TO AL PACINO)

Readers who have been following this Blog over the past 8 odd months will recall that in my writings it has always been my attempt to try and pre-empt the Markets. Remaining ahead of the curve, if one might call it that, is not an easy virtue given the unpredictable nature of the Markets but I have tried nevertheless. In fact, one of the main grouses that Investors in general and retail investors in particular have regarding the plethora of Market opinion-makers is that most, if not all, drift with the flow; in uptrends everyone turns super bullish and downtrends see them scrape the bottom of the barrel with outright pessimism. This 'behind the curve syndrome' seems to affect many.

On my part, readers will agree that I have attempted to make a case for investing in the prominent Rate-Sensitives in the last Quarter of the last Calendar year much before the blow-out rally commenced in January 2012.(SEE POSTS 1, 2, 3 AND 4 BELOW). When I observed the unbridled buying frenzy evidenced in February 2012, I attempted to rein in the horses somewhat, through my cautionary Posts. (SEE POSTS 5 AND 6 BELOW)

Now, the overbearing feel which I am getting from the Markets is of Bears on the prowl. Trying to be objective and not relying solely on gut feel let us analyse why the Markets seem to be skating on thin ice.

• The global macros are muddying up again for sure with incremental liquidity likely to flow into Developed Markets particularly the US rather than chase prices in Emerging Markets.
• The China growth story seems to be slowing down and that is finding reflection in the muted performance of the Chinese indices of late.
• The Indian growth story, as we all know, is increasingly seemingly plagued with all the boo-boos that one can possibly think of;  encompassing sticky inflation, the infamous policy paralysis, GAAR with all its uncertainties, the retrospective Voda tax case, an uncertain political clime, incredibly bare reforms performance, crude oil threatening to boil over, the Rupee in an unfavourable spiral, the fisc refusing to find effective redemption and yes, of course the much awaited Rate reversal yet to give us a sighter.
• All the above seems to be making Foreign Fund Managers (and they are the ones who call the shots, remember) increasingly uncertain about deploying further in India, at least in the near term

On the other hand, the possibility of a concrete start to the Rate reversal Cycle soon seems to be the proverbial silver lining that could stop the Markets falling off the cliff. A few bold steps in the near future concerning the possibility of a substantial Petrol Price hike and the Diesel / kerosene / lpg deregulation (the latter being unlikely) could possibly turn the tide for our Markets.

My abridged feel is that, in the very short term, the Markets will drift lower with the Rate-sensitives doing like-wise and by the end of next month things should be a lot clearer. In the interim, the conviction of many a market participant would be sorely tested as the blotches of red start getting larger on Portfolio maps.

So guys be prepared for some Bear strains on the airwaves!!!



POST 1 FMCG REVIEW
POST 2 HEADS UP ON INTEREST RATES
POST 3 WILL HISTORY REPEAT ITSELF PART 1
POST 4 WILL HISTORY REPEAT ITSELF PART 2
POST 5 OURS IS NOT TO REASON WHY
POST 6 CAUTION PART 2