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Indian astrologers predict a stock market crash

By: Peter Cooper, Arabian Money


-- Posted Monday, 21 December 2009 | Digg This ArticleDigg It! | | Source: GoldSeek.com

Indian astrologers have been posting gloom and doom on their websites for the first time since August when they got the Chinese stock market correction right. Now they are forecasting a sell-off in Indian stocks before the end of the year.

Perhaps Indian astrologers specialize in emerging markets but there is also plenty of concern in global financial markets that, after the massive run up since the lows of March, investors will decide to cash out their profits.

Of course, skeptics will always argue that astrologers read the newspapers as much as the stars and planets.

Indian hyper-inflation

Economists point out that there is a rare conjunction of very high food price inflation and a high stock market with a massive government stimulus program and record monsoon season. To tackle inflation the government will have to raise interest rates and crash the market.

In a country which still has the world’s largest population of chronically poor people a 20 per cent surge in the wholesale food index is extremely serious. Potato prices have doubled in a year.

The Reserve Bank of India is now widely expected to tighten the money supply with an increase in the cash reserve ratio, possibly before its next review which is due on January 29th. Stock markets do not usually sit around waiting for their death bell to sound, and a rush to the exit is standard practice with doom on the horizon.

Not only the astrologers have cast their charts. Dr. Marc Faber told a press conference in Mumbai that a 20-30 per cent correction from current valuations would be normal after such a run as ‘markets don’t keep going up in a straight line’.

The question then is whether this correction will indeed by a blip on the upward march of Indian stocks, or a more fundamental challenge to this momentum. Some see recent gains as typical of the spike period in the final stages of a bull market, rather like the Gulf markets in 2005, for example.

Government-induced bubble

That would infer that the Indian economic strength of 2009 has been no more than a bubble produced by artificial government stimulus in an effort to head-off the global recession, rather than a more fundamental improvement in economic productivity and local demand.

Doubters think the same of Chinese economic growth this year: more of a triumph for smoke and mirrors accounting, bad lending practice and investment in over-capacity than a real economic miracle.

If they are right then the day of reckoning may not be far off, and Indian astrologers right again in what they see in the stars.


-- Posted Monday, 21 December 2009 | Digg This Article | Source: GoldSeek.com


About Peter Cooper:
Oxford University educated financial journalist Peter Cooper found himself made redundant by Emap plc in London in the mid-1990s and decided to rebuild his career in Dubai as launch editor of the pioneering magazine Gulf Business. He returned briefly to London in 1999 to complete his first book, a history of the Bovis construction group.

Then in 2000 he went back to Dubai to become an Internet entrepreneur, just as the dot-com market crashed. But he stumbled across the opportunity to become a partner in www.ameinfo.com, which later became the Middle East's leading English language business news website.

Over the course of the next seven years he had a ringside seat as editor-in-chief writing about the remarkable transformation of Dubai into a global business and financial hub city. At the same time www.ameinfo.com prospered and was sold in 2006 to Emap plc for $27 million, completing the career circle back to where it began a decade earlier.

He remains a lively commentator and columnist as a freelance journalist based in Dubai and travels extensively each summer with his wife Svetlana. His financial blog www.arabianmoney.net is attracting increasing attention with its focus on investment in gold and silver as a means of prospering during a time of great consumer price inflation and asset price deflation.

Order my book online from this link




 



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