Tuesday, March 20, 2007

I just started reading “Reminiscences of a Stock Operator” by Jesse Livermore. It is another of the investment/stock market classics and tracks the trading life and fortune of Jesse Livermore, arguably one of the most famous stock operators in the world.

Its interesting times in the stock markets worldwide. They are very volatile. The Indian markets witnessed a sharp fall in the last one month. The finance minister did not help matters as his endeavor to control inflation was seen in some quarters as a move back to the price-control days.

One definite area of concern is the inflation in both WPI and CPI. This has resulted in RBI (Indian Central Bank) to increase CRR and reduce liquidity in the system. This in turn has pushed interest rates upwards. So, now Indian businesses are faced with a double problem. One, of increasing cost of capital and two, of reducing earnings growth.

Unless the interest rate stabilizes I think we may be in for a period of under-performance for the Indian markets.

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