Fairval

Notes on Indian equities, sectors and economy

India’s bull market is over

Posted by fairval on March 30, 2007

RBI’s actions today confirm what I have been feeling for sometime – this bull market is over, alteast for the next 6 months or so, if not more. The feedback I got from today’s drastic measures by RBI is that interest rates will rise by another 1-2%. That is huge (since we have already seen a rise in the 1-2 years. At say 12% or more for a home loan, demand has to fall. So demand slowdown, GDP slowdown – all of that looks a reality now. Corporate expansion plans may be hit.

For investors as well, cash (FDs etc) seems a better option. Canara Bank is giving 9.5% for a one year deposit. Deposit rates may rise to 10% or so. So why invest in equities. It is time to be overweight cash, underweight equities and real estate.

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