Market Fall-- What to do now.

Barack Obama policies look theoretically quite sound. His recent talk on banks taking on additional risk and profiting from it and it they fail-- ensuring that the government bails it out - makes a lot of sense.

Where is the capitalism fundamentals when you make money if you take risk and call it right and you still make money if you take risk and you call it wrong. ( check out all the bonuses that the investment banker made in the recession)

So because of these comments -- markets have fallen quite a bit-- sharp falls across the world.

In India compounded with the above comments, inflation is starting to really heat up and because of that the RBI is planning to increase bank rates ( CRR) in its next policy in the coming week. Market pundits are  skeptical that the firming up of the rates will slow down growth.

Here are some points in favour of what the pundits are saying.

1. If you look at the GDP growth which has come out quite strong most of it has been because of government spending and not really infrastructure investment by private companies. A clear view of that can be seen by the bad nos shown by L&T -- an infrastructure major. Investment has lagged the GDP.

2. Exports are just coming into positive territory-- but still need a lot of support.


I think that while there is a definite consensus on the fact that RBI will hike rates on jan 29th, it is the right think to do-- growth has some momentum to it-- and the growth in the world is also on an upward trend-- however what will kill us is inflation and that must be contained!

So what to do now. I think that the markets are headed for a small correction-- which is good for the markets and will give us great opportunities to buy into companies. ( read my previous post)

This is also a good time to invest in gold ( read my previous blog). Here is something from the economictimes on gold... read this also

so wait with a little patience and you will be well rewarded.

what are you doing now? What about preparing a watch list of stocks you'd buy once the correction really starts dissapearing

happy investing.!