Take hard decisions to bailout Indian economy

Great leaders take tough decisions during crisis. Barack Obama plans to crack down on international tax havens, including Jersey, Guernsey and the Isle of Man, within weeks of taking power in January. We need such daring acts from leaders in these troubled times. Indian leaders should encourage Foreign Direct Investment but not “hot money in stock markets”. Indian Government can learn many lessons from young Obama and his emphasis on jobs.

It is time for Government and SEBI to make stock exchange functioning a more transparent one. It is time to remove broker’s stronghold over BSE. SEBI should reveal all the major transactions and suspicious activities on daily basis. It is time for reforms to gradually replace hot money from stock markets and make them less volatile and more investor friendly.

Former Federal Reserve Chairman Alan Greenspan on US economy: He was frank in his assessment and admitted his mistakes.

"We are in a recession, very severe, there's no question and Gross domestic product in the United States in the fourth quarter is going to be down significantly. We know we are going down and there's very little we can do about that. It's important to recognize we are not in quite a free fall but something close to it. Economy, and indeed the world economy, has tilted over and is moving down fairly aggressively, pretty much across the board. There's no way of preventing what's going on now. That was caused by the shock of the financial system a couple of months ago. All bottoms look like what we're looking at now, but it doesn't follow that this bottom always leads to a recovery. It may just be another stage before you go down again, and I'm not going to forecast where we are going because I frankly don't have a clue. "

China stimulus package: China announced $570 billion stimulus package to spend over next 2 years. China Government will spend this money to finance projects in low-income housing, rural infrastructure, water, electricity, transportation, the environment, technological innovation and disaster relief programmes

Economic statements:

1. India’s GDP growth will be around 7-7.5% - PM Manmohan Singh. Centre for Monitoring Indian Economy (CMIE), estimates that GDP growth will be around 8%. Whom you believe?

2. Kamal Nath: We need to pump Rs 25,000 crore in the next 6 months into infrastructure without worsening fiscal deficit.

3. Real Estate prices in India will further correct by 50% - SBI Chairman O.P. Bhatt.

4. Only 0.25-0.50% of the country’s population lost money in stock markets and real estate and that should not be the reason to panic- SBI Chairman. How ignorant he is. Does he know about 80:20 rule? How only few people always influence consumption and economy. It’s not about number of people but amount of money.

5. Indian financial crisis may end in 2 years – Bakul Dholakia, former director, IIM-A.

6. Inflation will come down to near zero by March, 2009 - Edelweiss CEO Rashesh Shah.

7. “Global trade will decline for the first time in 27 years” - World Bank President Robert Zoellick.

8. “We will become bankrupt without a bailout package or merger” – General Motors.

Financial statistics:

1. CII: Indian GDP growth rate will be around 7.4-7.8%. CII’s earlier estimate was 8.3-8.6%. We will see further reduction in estimates by January. My estimate for current ear is around 7%. India’s GDP growth in the next year would be around 6%.

2. Estimates: US retail sales probably fell in October by the most since the 2001 recession, Bloomberg Survey. Actual report will come out on November 14.

3. 19 US banks failed in 2008 and more will fail in the coming months.

4. Indian exports will by 20% in FY2008-09 and fail to achieve $200 billion target. Sectors that will be affected are Textiles, apparel, gems and jewellery, diamonds, brassware, handicraft and leather.

5. The number of employed Asians in America fell to 68,70,000 in October from 69,04,000 in September.

6. 100% of the world GDP growth will come from emerging countries. Most of the developed countries will contract in 2009.

Positive Stock market news:

1. Lupin will launch new cardiac drug in India. Cardiac drug market in India is around Rs 3,600 crore.

Negative stock market news:

1. OPEC nations are planning for cuts in output to stabilise crude oil prices.

2. HDFC Bank lodged a FIR against PNB for bungling Rs 7.9 crore.

3. Reliance Retail will shut down some stores and restructure its business. Big TV DTH CEO quitted. Retail sector will face hard time in the coming months due to fall in domestic consumption.

4. Bajaj Auto slowed production due to fall in demand and piling up of inventories.

Global recession news:

1. Britain: 8.8% individuals and 10.5% corporations declared insolvent in the third quarter in England. This is 26% high over previous year and is expected to reach 50% high by the end of fourth quarter.

2. USA: German logistics giant Deutsche Post will announce 20,000 layoffs in America. Another 20,000 jobs will be lost in partners companies. Shocking news!

3. More than 3 lakh travel and ticketing agents will lose jobs as Airlines stopped paying commission.

My views on OM stock picks: Outlook Money magazine in the latest issue picked 8 stocks for accumulation which will give good returns for long term investors.

1. Bank of India: Best PSU Bank for investment. SBI is the next best stock.

2. Titan Industries: Wonderful performance in the last quarter.

3. HDFC Bank: One of the “best 7 banks in the world”. Axis bank is another option.

4. KS Oils: Fastest growing company in the safe business.

5. Mphasis: Best stock in the IT sector. Wonderful performance in the last quarter. Geometric and Geodesic are other options.

6. Bharti Airtel: Good stock but large FII holding is a concern. They may exit if things deteriorate for Telecom sector.

7. Indraprastha Gas: Conservative stock like GAIL. 2010 Commonwealth games in Delhi is a huge boost along with Government's pollution control efforts.

8. Emami: I am not tracking it.

Click here to read more about Outlook Money stock picks.

Good article:

1. Why one should bet on China?

Financial jargon: What is LIBOR?

LIBOR is the London Interbank Offered Rate, a measure of the rate that banks assess other banks for loans. LIBOR rises mean things are bad. ICICI Bank recently faced problems in this aspect. Confidence is crucial in financial system.

Obama and Outsourcing: I failed to understand the logic behind the positive statements on “outsourcing” and why they are underestimating a tough leader like Barack Obama. He will act in a ruthless manner in creating jobs for Americans. If imposition of taxes on outsourcing companies will create jobs for Americans, he will just do that.

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