Its been a scenario of doom and gloom all across the world the past week. As the Financial Markets bleed, doomsday predictions are announcing the coming end of the world. Lets see what the future holds for us.
Crystal ball gazing has always been difficult.Some things are apparent now. The US will no longer be the superpower it once was. Its influence is on the wane. It is a gradual process, buy say in about next 20 years it will no longer be as dominant as it once was.
They say every century belongs to a country. Earlier,it was the British who ruled the seven seas on the back of its fleet and industrialization. Before that we had the French and Spanish domination.
Printed paper or currency is losing value. Mindless printing of currency notes has eroded the buying power of the US Dollar. Precious Metals like Gold and Silver are the new safe havens.
Downgrades of US AAA Rating means it would be difficult for US to borrow from the world at the same almost zero interest rates.
Europe is in doldrums of its own. After Greece and Ireland, now Spain and Italy are on the verge of default. The future of Euro is under question.
With the 2 major currencies of the world, the Dollar and Euro having a major question mark against their name, gold emerges as an alternate currency.
Domestically, the car sales are slowing down, the housing sales are down and the economy is slowing down
The tell-tale signs are all there. You have new launches like the Volkswagen Vento being pushed at 6.99 % Interest Rates. We keep getting smses from builders imploring us to buy their flats.
The good part is the sharp drop in oil prices. This means no more fuel hikes in the short term.
Looking at the big picture, the cycles of boom and recession have shortened. India does not get into recessions, since it is a booming economy we experience what is known as a slowdown.
The focus now would be on government policy making to bail us out. If we see good reforms then Indian Markets would do well.
For now, we are firmly in the downtrend. Expect support around Nifty 4800 and Sensex 16000 levels.
That is the time, when we buy good strong companies that have survived precious slow downs and come out stronger. Till then, we wait and bide our time.
Enjoy the Rains and keep buying Gold, Gilt funds and small quantities of good stocks.