Finally, my fear of Credit rating downgrade due to nuclear issue is finally coming true. Read my original article "NUKE deal and India's credit rating....." dated 23-08-2008. After 22 days, my fears"ditto" is coming true. The article is reproduced after a few Para.
S&P released today that it might reduce India's credit rating from Investment grade to Junk grade. This will cause mass exodus of money from India. All pension funds, retirement funds, hedge funds will run for the exit because they are not authorized to invest into non-investment grade country.
S&P mentions the deteriorating fiscal discipline as one of the cause. But these credit rating companies are goddamn "Opportunist" and have always political agenda. They go by the dictates of the United States establishments.
By terming as "non investment grade". what they are telling you is that you are not friendly to the US government. Nearly 1/3rd reserve of India is also not parked with the US government - it is outside USA. These are not friendly signs for them. These are all untold reasons. You have to read what they mean rather than reading it in strict literary sense.
FII funds flow, especially long term investment money from US Pension funds were the main reasons for SENSEX's meteoric rise.
"Easy it comes, Easy it goes" said Danny DeVito in one his witty movies - OPM (Other People's Money).
Now those of Indians who have false pride of patriotism, I want to tell them once for all - This is not a war that you have to display your patriotism - this is financial world where you have got to be "realist" like me.
Expect SENSEX to fall very hard, and Indian rupees to go to Rs 48 at least if not 60.
Government of India was "IDIOT" . When the SENSEX rose to almost 21000, it had the perfect opportunity to sell various Public Sector Unit's stakes, realizing more than 400,000 crores. It could have then give the Tax benefit to the citizens after 50 years of hard work. But no, even Manmohan Singh and P Chidambaram are not visionary. They are good people, but very dumb. If they can not capitalize on screaming opportunities , they lose their right to leadership, I really wanted to use much stronger word, but would not.
Those of you aspiring for SENSEX to rise to 21000 or 40000 within next 3 years, forget it. Forget India's growth story - you need the capital but the SEBI, RBI, and Government of India has killed that very source. Sooner these bad guys leave the throne, better it is for India.
Here is my old article:
QUOTE
Title: NUKE deal and India's credit rating.....
United State's reminder to India to speed up the civilian Nuclear deal is a very serious warning having tremendous implications.
It may be noted that India's credit rating was upgraded to Investment grade only after Nuclear deal in principle. This caused exodus of US Pension Funds and other similar funds who are authorized to invest only in investment grade country.
If Nuke deal does not become a reality, there is serious risk to India for losing its investment grade status. If that happens, there will be mass exodus of Hedge and Pension funds from India. This will also push down Indian rupees to Rs 48 or further down, increasing the Oil Import bill by another 10%.
Indian growth story will be severely dented. It is important for all political parties to reconcile their differences and at least approve the deal so that catastrophe does not happen.
This will be the most important event. Watch for the early approval of the deal or rush to the exit gate to sell the stock at whatever the price. Recovery of stock market will be highly impossible, except for high tech stocks.
As hedge, stay with the high tech and BPO stocks. who will be least affected. Their fall from grace during such market meltdown will be the best buying opportunity.
Kalidas, Hong Kong
23-08-2008 (Ref: 09-061)
UNQUOTE
Kalidas, Hong Kong
14/07/2008 (Ref: 09-078) |
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