Bear Hug

Around New year, in a party, guys were highly vibrant on Indian economy and stock markets. Some went up to extent of comparing themselves with Anil and Mukesh. However, no fault of theirs. Bull-ride always gives you a solid kick. Perpetual cynic that I am, I did not want to bust their euphoria amidst soaring spirits.

Shipping freight markets started slipping before the world could wake up with the new year hangover. Dry and tanker market were in shorts soon.

Dow Jones, Nikkei, Han seng and other Eurpean markets were already down hill but Sensex defied gravity. But what a turn around in last couple of days. Markets world over are in a bear hug. Most of them would now say, it was inevitable- they saw it coming long back. But truth is, these very people thought that the emerging Bric was insulated from the biggest use and throw economy of the world and escalating energy prices.

The companies being traded, were pumping money in their own stocks, giving paper push rather than any tangible physical push by way of realistic growth. Secondly, some companies, with swelling funds, were getting extra-adventurous and treading in unknown territories.

Such a nasty fall in market value of companies, is bound to hit some of them out of action forever. Only companies with limited and gradual approach would survive. No doubt emerging markets are growing with good speed, but to sustain growth, they need to be more innovative and spend more on research and development.