Sublime Consulting

It has taken a while for me to compile this concluding part.. while the Sensex is almost blasting its way to 19K!..

After culling through lot of data and research reports..its pretty clear that our markets are probably going to scale newer heights in the next 12-18 months or so..

‘Liquidity’ is the buzzword going around the markets..
Will the Fed cut rates again [on Oct 30, 2007] which would lead to more fund flows into emerging markets?

Meanwhile..some interesting theories have started floating around in the last 3 weeks:
1. Decoupling of Emerging Markets..
2. Low Correlation levels of India with other markets..
3. Is History repeating itself and will the next bubble be in emerging markets?
4. Will the central bankers get autonomy to take decisions without being influenced by the government?

On the home front the political fiasco has been merely postponed..
If one were to go by the latest news, there probably wouldn’t be a mid term polls after all..
this will further get ratified on 22nd October 2007 when the UPA meets once again..The stability factor could be decisive in bringing more fund flows into the country for the next 12-18 months..

The earnings season have kick started on a good note [In line results for Infosys and HDFC bank beating the street expectations] and it does look like there will be some decent number of positive surprises rather than negatives..

What is worrisome with ‘liquidity’ in the Indian context is.. the companies seem to be getting into unrelated diversifications[eg constructions cos getting into telecom, almost all large business houses getting into retail]..
One wishes its not the repeat of the 1990s..

What should you and I do as a long term investor in the next 12-18 months? Like I said before in the previous post [Sensex at 20K].. Re-balance/Churn selectively equity portfolios by booking significant profits at higher levels, buy Gold [ a very interesting piece followed by advice at the end of the article by the noted columnist Anantha Nageswaran]and buy/accumulate into businesses[at dips] that one belives strongly will deliver decent returns over a period of time.. One should also look at diversifying into international asset classes after due dilligence and research..now that the RBI has increased the investment cap to $ 200,000 per individual..
For first time investors in equity markets.. its better to participate in the equity markets through the systematic plan route in equity diversified/index/etf mutual funds..
For those who want to ride the momentum and make a killing on their short term portfolio allocation..may god bless!!

While we are contemplating on getting on to the bandwagon of the great chase ..I am reminded of Charles Mackay’s ” Men, it has been well said, think in herds ; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one!”