Year 2009 : Markets a mix of Fear, Uncertainty, Hope and Confidence

Dear Friends,

My Heartiest wishes for a Happy and Prosperous New year to all of you and your families. Like most of you, I am also looking forward to this year to bring rays of new lights to our lives which will enlighten us towards better investing decision that would lead to  a prosperous future.

Year 2008 was the year of movers and shakers. While the stock markets woke up to a worrisome state of valuations, the year, as it moved ahead turned out to be gloomy with financial turmoil and recession gripping the state of affairs. Globally, the situation worsened and all measures to built in confidence of Investors in the markets proved to be ineffective. We have moved in the New year with the wounds of the past year. But Year 2009 brings in a mix of emotions to the stock markets. Lets see what this year has in store for us.

The Fear Factor 

The Scars of the mayhem of 2008 are still looming on the Investing Community. The Credit Crisis, US Recession, Global Slowdown, Commodity price Crash , Bubble bursting of Real Estate Stocks are not the things of Past. These are the wounds that will be carried in 2009 and would continue to haunt the markets. The L (Liquidity) Factor which laid the foundation of the Historical rise of stock prices in the Year 2007 is missing. Even at current levels Investors are not confident of putting their money into Equity. Why ? That’s the Fear Factor. The Fear that markets may go down deeper as the Global slowdown unfolds itself to emerging economies. The Fear that corporate results in 2009 may not turn out to be good stories. The Fear that globally, the economies may take much longer time to build back the confidence on Investors in the Markets.

It’s Foggy all around

The biggest cause of concern for the common Investor is lack of clarity on how the things will fan out in future. For us it’s important that the Foreign Institutional Investor drive back with Dollars to our country and Invest in our markets. It’s important that our companies remain competent and profitable and continue on the growth path. It’s important that the great Indian Consumption story revives itself. Being the Election Year, it’s important that the country has political stability and the investor perceive the outcome as good for the nation. It’s important that our youth remains employed and wrath of recession do not fall on their jobs. It’s important that not only we, but globally the economies turn around with greater resilience. But when will these things happen is a question mark. The Uncertainty is that when we will come out of this uncertainty !

Hope of Revival

Every night is followed by a day which removes the shadow of darkness and provides a new lease of life. Stock Markets are no exception. It’s not the first time that we are seeing such a meltdown. It has happened in past and if we go by history , we have recovered from these meltdowns.

1992 crash 2000 crash

The History shows that these major crash have taken time to heal and Rebound, but ultimately we did recovered and performed well. The current downtrend may take whole of Year 2009 to consolidate or even the next year, but it has to rebound and hence if you want to reap handsome gains, you would need to invest in the downtrend and wait patiently as the markets settles and unsettles and again settles at the turn of events.

Confident of our abilities

We had braved earlier downtrends and emerged as a stronger economy. We have the ability and stuff to do that again. India has the ability not only to face the current crisis, but it should also show the world the way to get out of the current mess. The world today is looking at countries like India and china to save them from the crisis. The Reason is that the foundation of our growth story is deep rooted and is fundamental in nature as against the ill regulated practices of the developed countries. If we look at the factor that helped India speed up its growth, we will find that these pillars are equally strong. We still have the demographic advantages, we are young, we have huge population which drives our Consumption story, We are committed to develop our Infrastructure, Our companies have proved their mettle, we have huge natural resources and above all we have a positive frame of mind which says that we will manage to emerge as a winner. In my opinion, India and other emerging countries would continue to attract Investment, once we are through this lull period of slowdown.

Outlook for Investors

The Year 2009 will not be a year of surprises. It will be a year in which an Investor would have to show his patience, choose stocks at reasonable valuations and wait for these stocks to perform. The worst may not be behind us, but the year 2009 should end towards a path of gradual recovery.


Unknown said...

Hi Rajesh,
Can you list 5 stocks where one can Invest during these turbulent times ?


Anonymous said...

Hello Sir,
What is the outlook for following stocks

JSW Steel
Reliance Industries
Jet Airways

Please advice.

Rajesh Soni said...

I can tell you 50 stocks but all depends on your risk profile...The questions looks broad enough to reply on this board.

Rajesh Soni said...


JSW Steel - Weak
Ranbaxy- Stable
L&T- Can't say as of now
Reliance Industries- Good
Jet Airways - Avoid

Please remember outlook may change very fast in today's scenario so please take informed judgement and keep your financial advisors in loop.