Yahoo finance 4 june 2010
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Friday, June 04, 2010
Mail Today 4 June 2010
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Bloomberg 4 June 2010
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Wall Street Journal 4 June 2010
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Bloomberg Businessweek 4 June 2010
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Central Chronicle 4 June 2010
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Financial Chronicle 4 June 2010
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Nasdaq 4 June 2010
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Thursday, June 03, 2010
While Indian economy is on steroids, Indian capital markets are appearing to be on treadmill
While Indian economy is on steroids, Indian capital markets are appearing to be on treadmill
By Jagannadham Thunuguntla
A quick introspection and review of the last three years about the Indian economy and Indian capital markets, reveal that there is a specific sense of divergence and deviation.
While the economy kept overwhelming us with amazing performance by clocking the nominal GDP growth rates in the range of 12%-14% during the past three years, the capital markets are giving unmistakable signs of fatigue and indifference.
Different Asset Classes: Equity is the underperformer!
June-July 2007
If we just clock back to the period of June-July 2007, the Indian capital markets were experiencing euphoria and ecstasy, with the Sensex zooming past the all-time highs on daily basis. The primary markets were so welcoming, that any IPO was sailing through in a jiffy. Private Equity funds and FIIs were pumping money into India, as if there is no tomorrow. Sensex was at 15,800 levels. Even the most conservative investors (who had never invested in the capital markets) were slowly started to get convinced about the “sustainability” of the markets, have started to come into the markets – with the view of “not to miss” the buying opportunity – leading to “panic buying”. The anticipation is that equity will be “the best” asset class.
Cut to June-July 2010
The Sensex is still at 16,800 levels. After good three years, the Indian capital markets could able to post only +6.3% return, (that is, an annualized return of +2.0% per annum). That is far lower than the +88.0% return given by the Gold during the same period, (that is, an annualized return of +23.4% per annum). More surprisingly, the returns given by the equity markets during the last three years are far lower than the returns given by the risk-free RBI bonds of +28.0% return, (that is, an annualized return of +8.4% per annum).
During the past three years, the returns offered by different asset classes:
| Sl. No. | Asset Class | Overall return over the period of past three years (between June-2007 to June-2010 period) | Annualized return over the period of past three years (per annum) |
| 1. | Equity | +6.3% | +2.0% |
| 2. | Gold | +88.0% | +23.4% |
| 3. | Risk-free RBI Bonds | +28.0% | +8.4% |
Divergence between the Equities and Economy
Further, during the same period, the economy has kept firing all cylinders. However, that couldn’t become the respite for equities. The enthusiasm of the economy couldn’t get translated into the capital markets. This gives a sense that, while Indian economy is on steroids, the Indian capital markets are on the treadmill (just staying where they were).
In the history of the financial markets of the world, there were several instances where there was divergence between the capital markets and the economy. Sometimes, that “divergence-in-favour-of-equities”, and sometimes, “divergence-against-equities”.
For instance, Dow Jones Industrial Average (the index which tracks US markets) was at 874.1 on 31st December 1964. And, Dow Jones has reached 875.0 by 31st December 1981. That means, in the period of 17 years, the Dow Jones couldn’t move even by 1 point. However, during the same period, the turnover of the fortune 500 companies of US went up by 5 times. This underlines the fact that, while the economy and the corporates kept doing well, it is no guarantee for the performance of the capital markets.
Conclusion
The investor community have to keep these facts into account before forming their investment decisions. The euphoria alone may not guarantee the returns in the capital markets.
Wednesday, June 02, 2010
Tuesday, June 01, 2010
Business Standard 1 June 2010
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Business Standard 1 June 2010
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Manglorean 1 June 2010
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New Kerala 1 June 2010
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Pro Kerala 1 June 2010
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Rediff Business 1 June 2010
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