Indian Economy: News and Discussion (Jan 1 2010)

Nihat · Post by **Nihat** » 20 Sep 2010 17:31

Carl_T wrote:
Hari Seldon wrote:^^ I must say that I do get the feeling the desi equities mart is kinda bubblish right now.
Mind speculating on the reasons? Is it just a surge of foreign capital that is seeking a growing market? If so it may be rational to stay invested.

It's close to 20,000 today is the Sensex. Such a rapid and sudden rise is really not good. Especially given the lack of P-note transperancy for Record FII's

Ambar · Post by **Ambar** » 21 Sep 2010 10:59

They say healthy markets have corrections,BSE seems to be 'correction-proof' of late. Back in May/June, when most of the major markets pulled back including 'new economies' like SSC/HSE and Brazil, BSE barely lifted off the throttle.SSC was down 30% from its 52 week high, HSE by 19% and BOVESPA by around 18%,the yankee markets too were down by around 14%.BSE was the only market that had less than 5% correction from its yearly high and is now precariously close to its all time high!

If i really have to put my faith in the market signals then i have to believe that Indian economy is the most robust among G20 nations and that we have completed decoupled ourselves from the global economy.I am sure that many among you have a better understanding about the reasons for this meteoric surge, I, for one, fail to comprehend this pattern.

Ameet · Post by **Ameet** » 21 Sep 2010 11:48

USE cracks Rs 45,485-crore business on debut

http://economictimes.indiatimes.com/mar ... 596277.cms

Tanaji · Post by **Tanaji** » 21 Sep 2010 17:11

http://business.rediff.com/slide-show/2 ... crores.htm

EPF had misplaced over 2400 crore rupees. Amazing! And single entry accounting too..

Surely there is more than meets the eye. The 2400 crore did not "vanish" and come back.

Wonder how many such "errors" there exist.

Carl_T · Post by **Carl_T** » 24 Sep 2010 21:46

Nihat wrote: It's close to 20,000 today is the Sensex. Such a rapid and sudden rise is really not good. Especially given the lack of P-note transperancy for Record FII's

You're probably right, a secular trend upwards only becomes apparent after multiple smaller advances in the market. If this is a bubble, I wonder what's triggering it. Totally beats me.

Suraj · Post by **Suraj** » 24 Sep 2010 23:13

Inflows peaked at $700 million/day a few days ago, and inflows in Sept at ~$4 billion. Net inflows this year have exceeded $25 billion, an alltime high, even though the seasonal economic apex period - the festival season - has not yet begun. With GoI relaxing restrictions on foreign holdings of Rs. denominated bonds, more emerging market and world bond funds will buy Indian debt. Some folks have already called out that a correction is due.

RamaY · Post by **RamaY** » 24 Sep 2010 23:26

^ I have a feeling that these FIIs are in for next round of stock market bubble...

I recommend BRFites dump their stock holdings and re-enter after the bust... My brother ( a CA) told me about this cycle...

Carl_T · Post by **Carl_T** » 24 Sep 2010 23:36

If more foreign inflows are predicted with relaxation of the caps, that means then this should only be the start of a bull market, after a brief correction admittedly.

Suraj · Post by **Suraj** » 24 Sep 2010 23:42

But the relaxation applies to bonds, not equities. Inflows into bonds would be less volatile, and would help push down yields, making it easier to issue debt. My only concern is we need a strong desi rating agency for the debt market, not the usual Poor Standards and Moody chamchas.

RamaY · Post by **RamaY** » 24 Sep 2010 23:43

Thanks for the insight...

Hari Seldon · Post by **Hari Seldon** » 25 Sep 2010 08:11

Suraj wrote:But the relaxation applies to bonds, not equities. Inflows into bonds would be less volatile, and would help push down yields, making it easier to issue debt. My only concern is we need a strong desi rating agency for the debt market, not the usual Poor Standards and Moody chamchas.

+1.

Also, hopefully, we'll learn from demonstrated western fallibility on this score. Have the rating agencies get paid by investors buying the bond issues - *not* bond issuers only. That way, moral hazard is avoided. JMTPs only.

Neshant · Post by **Neshant** » 25 Sep 2010 13:33

I have zero expectations of rating agencies in general. If these guys knew what the risk of something was, they would not need to be in the rating business. They would be fabulously wealthy already as they'd be able to spot risk a mile away and short it.

Its a waste of time getting their ratings.

Singha · Post by **Singha** » 25 Sep 2010 16:56

I sold all my MFs recently to stay in cash and lock in some paltry few lakhs gains to complete the woodwork and appliances on my new flat!
missed my chance to cash out in 2008 and much repented later. lots of indians will be dumping now, while FIIs keep pumping it up until they
decide to cash out and generate handsome returns for their shareholders.

Carl_T · Post by **Carl_T** » 25 Sep 2010 21:27

I think this will keep rising for a while, investors will continue to seek strong returns outside the US and India will prove attractive.

Gold however, I think is in a bubble. There is no upside to being in gold unless you're predicting the GoTUS to default on its debt. But the upside to shorting gold is pretty substantial.

amdavadi · Post by **amdavadi** » 26 Sep 2010 00:21

Gold will be going up until next summer. Best thing i ever did was bought few eagles when dot com busted.

amdavadi · Post by **amdavadi** » 26 Sep 2010 00:27

singha sir,

Old money people dont get out of stock market. I know some people, they have never sold a single indian stock.
They been buying & holding since 70's & 80's. This people are happy with dividend & bonus shares.

Sanjay M · Post by **Sanjay M** » 26 Sep 2010 00:49

Acharya wrote:Indian Conglomerate in Talks to Buy MGM
Wall Street Journal - Mike Spector - ‎12 hours ago‎
Indian conglomerate Sahara India Pariwar is in exploratory talks on acquiring beleaguered movie studio Metro-Goldwyn-Mayer Inc. for more than $2 billion, said a person familiar with the matter.

http://news.google.com/news/more?pz=1&c ... E_euBHauDM

Aha! You heard it here first!

http://forums.bharat-rakshak.com/viewto ... 42#p910442

Carl_T · Post by **Carl_T** » 26 Sep 2010 00:59

amdavadi wrote:Gold will be going up until next summer.

You have been warned.

darshan · Post by **darshan** » 26 Sep 2010 01:07

amdavadi wrote:singha sir,

Old money people dont get out of stock market. I know some people, they have never sold a single indian stock.
They been buying & holding since 70's & 80's. This people are happy with dividend & bonus shares.

My family still has shares bought by my grandfather ages ago.

Carl_T · Post by **Carl_T** » 26 Sep 2010 06:24

I love how Satyam first said that they were going to present audited financials soon, triggering a 25% rally in the stock. Then a few days later they said they were delisting sending it crashing down again. Wondering how many of the insiders profited. Jai ho.

Rony · Post by **Rony** » 27 Sep 2010 08:48

Sanjay M wrote:
Acharya wrote:Indian Conglomerate in Talks to Buy MGM
Wall Street Journal - Mike Spector - ‎12 hours ago‎
Indian conglomerate Sahara India Pariwar is in exploratory talks on acquiring beleaguered movie studio Metro-Goldwyn-Mayer Inc. for more than $2 billion, said a person familiar with the matter.

http://news.google.com/news/more?pz=1&c ... E_euBHauDM
Aha! You heard it here first!

http://forums.bharat-rakshak.com/viewto ... 42#p910442

MGM rejects Sahara's $2 billion takeover bid, says Subrata Roy

Metro-Goldwyn-Mayer Inc has rejected an over $2 billion takeover offer by Indian conglomerate Sahara India Pariwar as creditors are looking for alternative plans to bail out the struggling Hollywood studio.

Sahara India Parivar chairman Subrata Roy said on Friday that the offer was rejected within hours of his conference call with creditors on Tuesday.

MGM owes its creditors around $4 billion against Sahar's offer of $2 billion.

MGM's creditors are now negotiating a restructuring plan for the studio that could include a prepackaged bankruptcy, he said.

Rony · Post by **Rony** » 27 Sep 2010 09:37

China Demographics Dictate India as Global Manufacturing Hub

China’s rapidly aging population is set to dramatically shrink its workforce and effectively pass the baton to India as the world’s manufacturing hub, according to analysis from Morgan Stanley and the Global Times. China’s one child policy, which has seen it manage its population over the past three decades, is now finally kicking into the work pool and reducing the number of Chinese workers.

The Global Times says, “2015 will mark the beginning of the end of China’s demographic dividend.” The World Bank also echoes those sentiments, predicting that China’s GDP growth will fall to 7.7 percent in 2015 and to 6.7 percent by 2020. Morgan Stanley expects India’s growth to head in the opposite direction and to surpass China’s growth two years from now. Personally, I suspect that when speculation and manipulation is stripped out of China’s current GDP growth rates, India’s economy is already growing at a faster pace than China’s. China’s aging workforce is already having an impact on the nature of conducting business in the country. It was in recognition of this that China strengthened its labor laws two years ago, making it more difficult for employers to lay off aging staff without having to pay significant compensation, based on years of service, for loss of employment. That move effectively made employers financially responsible for at least part of the nation’s pension requirements. China will possess 200 million people above 60 years in 2015, and workers coming to retirement age are expected to add an unprecedented 10 million retirees per annum to that figure. That loss of workforce is already starting to make China more expensive, and this trend will continue. India, however, is poised to provide the vast bulk of the global labor pool. By 2020, the average Indian will be 29, while the average Chinese will be 37.

The data has interesting repercussions.

China is becoming a consumer market to sell to rather than a global manufacturing hub

This is often quoted as the dynamic that will maintain China as a major destination for foreign direct investment. While this is true, the nature of selling to China is still wrapped in many problems, especially for overseas investors. The China market is prone to protectionist measures, and with the Chinese government itself still a major shareholder in many Chinese state-owned enterprises, foreign investors will have an increasingly tough time competing with them. Additionally, selling to China requires a profound knowledge of Chinese culture and tastes. Then there’s the stranglehold that China has on much of its domestic logistics industry. Selling to China is fine, but it is a path fraught with difficulties. The successful foreign investor will have deep pockets and a sound Chinese joint venture partner to help them. The domestic expertise and finesse to assist sales of products to the Chinese consumer will invariably require Chinese local expertise. Brands well-known globally will have to adapt marketing, positioning and even recipes to fit the Chinese model. As I pointed out two months ago, white goods need to become red.

India’s infrastructure woes have become its opportunity

The most common complaint about India is its infrastructure, which coupled with a generally moribund economy for 40 years after independence, and some quite extreme weather conditions, has meant a lack of investment in virtually everything. That is already changing, as airports are fixed, bridges spanning oceans are built, and city subway networks are opened. For contractors, architects and engineers who made good in China, India is the new opportunity. A staggering US$500 billion is being spent in the next three years in India, and foreign businesses involved in any aspect of infrastructure development are scrambling to get into the market.

Global sourcing is relocating

China will still maintain various sectors for sourcing in which it has specific expertise, and of course there is still its domestic market to service. But the sheer weight of economics makes India the future tiger of global procurement. Wages are significantly lower than in China, and our recent Asian Comparator survey of wage levels and related costs in China, India and other Asian countries consistently showed India as excellent value for money in the labor pool. Sure there are comments about quality and that infrastructure bugbear again, but China went through the same issues twenty years ago. “Made in China” was a poor brand in the 1980s. India’s infrastructure is not as bad as is made out either, and the cost savings are there to be had. Relocating a business from China to India is also, from the legal, operational and financial perspective, rather easier than is generally considered, as our report earlier this month demonstrates. China meanwhile, continues to become more expensive, as the Communist China Price re-establishes a policy of charging foreign investors more.

I took the matter up over the weekend with a number of expatriate CEOs working in India. Crucially, they had also spent time in China – a minimum of five years each, and some up to ten – running businesses and foreign invested enterprises. Now they were in India and all working with significant businesses with global turnovers in the tens of millions to billions of dollars. When it came down to it, they said, China was easier to do business in than India. China was better at organizing big projects, and the labor pool was disciplined and productive in ways that India was not. However, when it came to the smaller details, India was far easier to live in than China. Cultural differences, languages, and more acceptance by Indians than Chinese of their overseas background and experience all made them feel more comfortable in India than in China. However, although India was more difficult at first base to do business in than China, the feeling was that was the precise reason they all had MBAs and years of management experience – they were being paid to solve such problems, and therefore it was “just part of the job.” Asked whether they would prefer to live in India or China (Mumbai was regularly compared with Shanghai) the surprising conclusion was that India was preferable. Several executives expressed a desire never to return to China. The conclusion therefore is simple: “India is more awkward than China when implementing large projects. But it is not insurmountable, and I am well paid precisely to solve such issues.”

Clearly, the attitudes are changing, along with the demographics. China may huff and puff and posture all it wants, but as it becomes increasingly belligerent towards its neighbors, more expensive, and apparently quite willing to blame foreigners for taking all the money out of the country in response to its economic woes, it is progressively becoming less tolerant of foreign investment. India is the reverse. China cannot, for once, turn back the tide that its long-standing one child policy has now revealed, and it is akin to being King Canute to suggest it will. China’s demographic advantages are coming to an accelerating end, and it is India that is set to take up the slack.

Hari Seldon · Post by **Hari Seldon** » 27 Sep 2010 09:46

^^^Have to wonder about the veracity of the 'Demographic dividend' assumptions made by economists decades ago, particularly as they relate to production/economic output.

It is no secret that capital has massively replaced labor as the prime mover in he production story. More output is produced today with fewer people than at comparable times in the past. Sure, capital is energy intensive and peak-oil or such fears of loss of the abundance of fossil fuels could lead to more demand for the labor component of the production process might well be a valid argument down the line.

So, my question would be - "so what if the avg age in china in 2020 is 37 versus 29 in India?" Their production potential needn't suffer necessarily as a result.

Of course, there is the other side of the coin of demographic deficit - the structural change in demand patterns in the domestic economy - as elders rise in numbers, their savings vanish into terminal consumption and they would need younger workers to pay into pay-as-you-go retirement/pensions systems to keep consuming.

All in all, a multidimensional problem. Hard to sday how exactly it will play out. Of course, we are watching to see how it goes. My crib with the article above is the assumption that the demographic dividend somehow favors India over china as a production base. I'm saying, that's not necessarily true any longer.

Airavat · Post by **Airavat** » 27 Sep 2010 10:10

How to access India's growth: Deepak Lalwani OBE

At the time of writing India's SENSEX index is threatening new highs and £100 invested five years ago in India's SENSEX30 would now be worth £270 (excluding inflation and dividends), compared with a return of just £103 from the FTSE 100 and £118 from the Dow Jones Industrial Average. So, how can investors participate in the India growth story, bearing in mind it is a high beta market and involves currency risks? Direct investment is possible from a growing list of leading Indian companies quoted in London and New York, but the less sophisticated private investor should consider reducing risk by investing through a collective scheme or an exchange-traded fund (ETF).

amit · Post by **amit** » 27 Sep 2010 14:19

Hari Seldon wrote:^^^Have to wonder about the veracity of the 'Demographic dividend' assumptions made by economists decades ago, particularly as they relate to production/economic output.

It is no secret that capital has massively replaced labor as the prime mover in he production story. More output is produced today with fewer people than at comparable times in the past. Sure, capital is energy intensive and peak-oil or such fears of loss of the abundance of fossil fuels could lead to more demand for the labor component of the production process might well be a valid argument down the line.

So, my question would be - "so what if the avg age in china in 2020 is 37 versus 29 in India?" Their production potential needn't suffer necessarily as a result.

Of course, there is the other side of the coin of demographic deficit - the structural change in demand patterns in the domestic economy - as elders rise in numbers, their savings vanish into terminal consumption and they would need younger workers to pay into pay-as-you-go retirement/pensions systems to keep consuming.

All in all, a multidimensional problem. Hard to sday how exactly it will play out. Of course, we are watching to see how it goes. My crib with the article above is the assumption that the demographic dividend somehow favors India over china as a production base. I'm saying, that's not necessarily true any longer.

Hari,

Some of the gurus here may probably be able to explain it better but my understanding is demographic dividend has more to do with savings than output. Provided they are employed, younger people save more, spend less on illness and buy big ticket items like houses, cars etc which generate demand.

Older people on the other hand, as you wrote, consume their savings, have a bigger medical bill and rarely spend on big ticket items.

Plus if there's any pension scheme then the younger productive population contributes money to keep pay the elders.

If you look at capital replacing labour, then Japan is much more capital intensive than China, so if going by that logic shouldn't Japan's growth be much robust than it is?

Abhijeet · Post by **Abhijeet** » 27 Sep 2010 15:58

This is probably stating the obvious. India may be a good place for expat managers living in First World cocoons -- after all, there's so much still left to do in virtually everything. For the average Indian, so much unfinished business just means a lower standard of living. The subways and airports are not yet constructed, the electricity and water are still unreliable, and there is still no access controlled expressway network between major cities. For GE this means a lucrative market. For the average Indian it's just 20 years more of infrastructure hell.

It's cold comfort that all these things are part of some bright future that will happen when we are all much older.

Aditya_V · Post by **Aditya_V** » 29 Sep 2010 11:58

Looks like the Agarwal guy of Vedanta has pissed of the Western Elites Big time, may be it was during the ASARCO bid or somthing. Ever since the Church of England withdrew thier investment in Vedanta, Yuvraj, UPA and Government of India are doing thier level bets to shut down Sterlite and Vedanta group

Sterlite Industries tanks 8 p.c. on court ban on Tuticorin plant

http://www.thehindu.com/business/market ... 802422.ece

nandakumar · Post by **nandakumar** » 29 Sep 2010 14:32

Hari Seldon wrote:^^^Have to wonder about the veracity of the 'Demographic dividend' assumptions made by economists decades ago, particularly as they relate to production/economic output.

It is no secret that capital has massively replaced labor as the prime mover in he production story. More output is produced today with fewer people than at comparable times in the past. Sure, capital is energy intensive and peak-oil or such fears of loss of the abundance of fossil fuels could lead to more demand for the labor component of the production process might well be a valid argument down the line.

So, my question would be - "so what if the avg age in china in 2020 is 37 versus 29 in India?" Their production potential needn't suffer necessarily as a result.

Of course, there is the other side of the coin of demographic deficit - the structural change in demand patterns in the domestic economy - as elders rise in numbers, their savings vanish into terminal consumption and they would need younger workers to pay into pay-as-you-go retirement/pensions systems to keep consuming.

All in all, a multidimensional problem. Hard to sday how exactly it will play out. Of course, we are watching to see how it goes. My crib with the article above is the assumption that the demographic dividend somehow favors India over china as a production base. I'm saying, that's not necessarily true any longer.

Dear Hari Seldon
The average age of person in China being 37 as opposed to 29 for India in 2020 is in itself not a significant parameter. This outcome is a function of the difference in fertility rate among the population in the two countries. As you know the one-child policy has resulted in an drastic reduction in fertility rate ( the number of children born per female population). In the case of China it is 1.73 while for India it is 2.81. Once the fertility rate goes below 2 we are looking at an eventual reduction in population other things remaining the same. If life expectancy has stabilised at whatever number of years a person is expected to live in that countries, two things happen. One, as I mentioned, population declines and two as a country moves from a higher fertility rate to a lower one (as in the case of China) the transition necesarily results in the age composition of the population worsening over time. So the point is not so much about 29 and 37 per se for India and China. It is what is going to happen beyond 2020. The prognosis there is not very good, for China. The real kicker is this. Demographers say that it is a historically well established fact that once fertility rate goes down in a community it takes a hell of a lot of time to get it up to the natural (from a stable population point of view) a reproduction rate of 2. I am not sure of the science behind it. But i suppose anecdotally one can say that families that traditionally had one child end up with their offspring too producing only one child. What that means is, China is condemned to having an aged population as changes in demography happen at a glacial pace where the measurement is perhaps in units of perhaps half a century or more!
Is the global business community aware of it and is therfore adjusting its strategies to the new reality? I would venture to suggest that this is indeed so. According to the World Investment Report 2010 published by the UNCTAD stock of foreign direct investment in India has grown roughly ten fold ($ 16.3 billion to $164 billion) between 2000 to 2009. The comparable number for China is a little under 2.5 ($193 to $473 billion). Of course, the slowing down in the raste of fresh investments is also due to the recognition that catering to the domestic market in China is a lot tougher proposition (the average chinese doesn't really seem to want as many barbie dolls as the American thinks that they must buy, to just give an example) than they might have imagined. And of course there is only so much you can produce for increasingly impoverished American consumer. Granting all that, domography too is playing a part in the slowing overseas investment flow.

manju · Post by **manju** » 30 Sep 2010 04:56

The rupee is appreciating against the dollar last few weeks. Any prediction for the next 6-12 month period?

vera_k · Post by **vera_k** » 30 Sep 2010 05:11

Abhijeet wrote:This is probably stating the obvious. India may be a good place for expat managers living in First World cocoons -- after all, there's so much still left to do in virtually everything. For the average Indian, so much unfinished business just means a lower standard of living. The subways and airports are not yet constructed, the electricity and water are still unreliable, and there is still no access controlled expressway network between major cities. For GE this means a lucrative market. For the average Indian it's just 20 years more of infrastructure hell.

It's cold comfort that all these things are part of some bright future that will happen when we are all much older.

FWIW, those cocoons ain't First World by that much. An acquaintance recently moved to HYD for an assignment, but moved back fairly quick because the wife couldn't handle the erratic utilities (electricity and lack of dishwasher were mentioned) and traffic. The only difference is that the expat is monetarily compensated for operating in a low productivity environment, but the locals aren't.

Ambar · Post by **Ambar** » 30 Sep 2010 06:38

manju wrote:The rupee is appreciating against the dollar last few weeks. Any prediction for the next 6-12 month period?

With Ben Bernanke printing $ like there is no tomorrow, USD will continue to make fresh lows against major currencies. Look at Swiss Franc,AUD,CAD - they are all at near historic highs against USD.
I don't know about the next 6 months, but going by the current trend and using 2001-2007 as yardstick, it is safe to say that rupee will continue to strengthen and may test that 38 Rs/ $ resistance within the next 24 months. Although it may have a positive impact on curbing inflation in India, the strengthening rupee will dent the domestic service sector.

Ambar · Post by **Ambar** » 30 Sep 2010 07:06

For those of you who follow the Indian stock market,do you guys think that it is a bit overheated at this point?

Back in May-June when several major indexes pulled back by 15-30% ( S&P 500, SSEC,HSI,Bovespa etc), the BSE barely pulled back and is now on the verge of making all-time high.SSEC is almost 60% down from its pre-recession high, HSI is down 25% from its 2007 high, S&P 500 is down 24% from its all time high. Are we in a equity bubble in India or are our fundamentals so strong compared to others that the current valuation is justifiable?

Singha · Post by **Singha** » 30 Sep 2010 09:40

the markets and global finance in general is so rigged, its probably meaningless to talk of fundamental strategies or long term plans. timing seems to be everything, if not by design, then by luck.

Hari Seldon · Post by **Hari Seldon** » 30 Sep 2010 09:45

Singha wrote:the markets and global finance in general is so rigged, its probably meaningless to talk of fundamental strategies or long term plans. timing seems to be everything, if not by design, then by luck.

+1 only. I no longer have the courage to venture into equities on any bourse (yup, even the desi ones). Bonds, however, are another matter. Typically more predictable in the larger markets.

Vipul · Post by **Vipul** » 30 Sep 2010 20:41

For those who have missed out on investing when the sensex was 6000 to 8000, they are soon going to get the opportunity to make amends.

alok_m · Post by **alok_m** » 30 Sep 2010 22:34

http://www.economist.com/node/17145035

Economist has decided that China worship is not good for them anymore...Anyways enjoy..

Despite all the mess and chaos of India, the country’s business is booming. This will change the world

akashganga · Post by **akashganga** » 30 Sep 2010 23:22

Ambar wrote:For those of you who follow the Indian stock market,do you guys think that it is a bit overheated at this point?

Back in May-June when several major indexes pulled back by 15-30% ( S&P 500, SSEC,HSI,Bovespa etc), the BSE barely pulled back and is now on the verge of making all-time high.SSEC is almost 60% down from its pre-recession high, HSI is down 25% from its 2007 high, S&P 500 is down 24% from its all time high. Are we in a equity bubble in India or are our fundamentals so strong compared to others that the current valuation is justifiable?

We are in equity bubble in India. BSE's PE ratio is almost twice that of S&P. If you factor in much higher growth rates BSE is still 30% higher than what should be. You should beware. Japan's Nikkei was close to 40000 in late 80s. It is about 25% of its high.

Carl_T · Post by **Carl_T** » 30 Sep 2010 23:30

Timing is pretty much impossible to do, the only strategy proven to work is long term fundamental value oriented investing. With that view you will be comparatively safer in both bubbles and sharp drops.

svinayak · Post by **svinayak** » 30 Sep 2010 23:45

akashganga wrote:
We are in equity bubble in India. BSE's PE ratio is almost twice that of S&P. If you factor in much higher growth rates BSE is still 30% higher than what should be. You should beware. Japan's Nikkei was close to 40000 in late 80s. It is about 25% of its high.

Japan has no more growth since they tied to western economy for high per capita income.

But if there is a limitless potential for high per capita income then the market has long term "potential"

Bad governance and wars can kill of these.

Dilbu · Post by **Dilbu** » 01 Oct 2010 18:28

Looks like The Economist has buried the knife, which it usually sharpens at every available opportunity, for now because it wants to use India's private sector growth story to deride China. The atlanticist mouth piece will show its true colours soon enough. Wait till the next edition.

Probably they were waiting till the end of CWG to come up with this article against China but Kamadi & co have efficiently thwarted those plans.