The cloudy weather seems to be clearing out gradually in the Indian Stock Market with the Stock Market barometer, the ‘SENSEX’ moving up slowly covering considerable ground in the last 4 weeks, after touching trough at about 12500 points to reaching over 15000 points in the current week, gaining about 20% in the process of recovery.
Five major reasons seem leading the recovery and based on these, the process of recovery is likely to continue till a crest is reached at around 17000 points in a couple of months with profit bookings from time to time effecting a fall too at times.
The reasons for recovery, as per my personal study is as under:-
- Firstly, the Government has survived the confidence motion with comfortable margin and that the Speaker is not going to resign. The resignation of Speaker, post confidence vote, would have put the UPA government to a further test of strength on the issue of electing a new Speaker.
- The Nuclear-Deal got the seal of Parliament albeit indirectly and the issue is over.
- The worst is over on the price front and inflation has more or less stabilized around 12%. From here the government can look forward to reducing inflationary pressure by controlling various economic parameters.
- The oil prices have hopefully started downward journey with the prices ruling less than $120 per barrel after hovering in the vicinity of $150 pb. Experts says that the prices may reach a floor level of as low as $90 pb
- The monsoon so far has been good and the wheat production is expected to be record this year as per preliminary estimation of the government.
However sustenance of recovery may not be durable enough with the approaching parliamentary election in early April’09. The scenario of another hung parliament will be looming large around January-February’09. It is only the formation of a new stable government that will give the final stability to the stock market sentiments.
Please note that these are my personal ideas and I have not consulted any market expert or business magazines whatsoever. So nobody should use this article for investment purpose.