We hear everyday on CNBC about how as a reaction to Fed action of raising interest rate the equity markets around the world are flundering. For the uninited this happens in the following way.
Though Indian markets as well as the other emerging markets have been responding in a positive way to the growh in the economy, their meteoric rise has been fuelled by the supply of FDI.
The rate of inflation is related to the supply of money in the market. With oil prices touching new highs, there is a real danger of inflation affecting people all over the world. One of the ways to keep inflation in check is by reducing the liquidity in the market ie reducing the flow of cash or easy money in the market. One of the ways of doing this is by increasing the interest rates on all lending.
This has a two fold effect. One, it reduced the amount of cash people are willing to borrow from banks to invest else where it also increased the amount of money going into fixed deposits and loans. Also, incurring new debt becomes expensive for corporations and they decrease their spending and hence growth. All of there have contributed to the outflow of hotmoney from the market leading to the crash that happened.
Now with BB, under playing the fears of inflation, it is hoped that there would be no futher increase in the nominal interest rates and we might see a resurgence of funds into emerging markets. This is what we may have seen during the last couple of days.
Also the fact that we bounced off the support level of 8800 we have may a stronger case for markets to gain some strength.
There have been some predictions of markets (BSE sensex) going up to 18000 in the next 2-3 years but for that cetiris peribus India would have to maintain its growth rate. of above 7 to 8 percent.
Its and easy game blaming someone else for all the things that do not go right in our lives. It is still fashionable in India to blame our leaders /politicians for all that is wrong in India. I would not say that this statement is far from truth but we are confusing cause and effect here.
We all eventually get the leaders we deserve. At least collectively as a nation, the leaders are a reflection of the current state of society. Once we get out acts together and are responsible citizens, politicians are abound to get their act together after all they are our own mirror reflection. They did not land from outer space and were not forced upon us(As much as conspiracy theorists would have us believe). Rather, they are chosen from amonst us and by us.
Term break has come and gone at ISB, faster than we could say break. After the hectic schedule of the first term we have to contend with Term 2 which is supposedly has the most packed schedule atleast in terms of the amount of reading, one has to do before each class. Even a super quick reader would have his or her reading skills being put to test just to keep up with the mandatory reading, other recommended reading notwithstanding.
Any how, we probably could do with some strategic skimming of the course. Ironically competitive strategy is one of the courses on offer in term -2 (probably should have been part of the first term, to help us all prepare for the grind ahead). Not that we need to be more competitive. The junta here is as competitive as can be but we surely could use some strategizing for the exams and on how to tackle.
That said, I did manage to skim through the introductions to all the four courses and am really excited about it. Besides comp., strategy we have macro eco.. (aka global economics), marketing and decision making (or Mark II as knows in US schools) and decision models and optimization. The faculty is great (atleast on paper). After putting up a decent show in the first, would need to get my 'A' (all puns intended) game in this term.
Amidst all the partying and playing in this break, did manage to catch a glimpse of the city, courtesy one of the local students. The weather has been excellent all this while so absolutely no excuse to complain.
Time has flown by so fast. Its hard to imagine that Term 1 is already over. (Well not actually. Two more exams tomorrow) Most of it has been great and some real moderate. Most profs have been great, some have been exceptional. In total we had 7, teaching 4 subjects, to each section. Profs were from Wharton, Kellogg and Columbia and teach mostly what is taught in these schools albeit customized for the Indian context. Gives you a good perspective on the differences between the two. (True for Finance and Marketing)
I think the best thing about ISB, is that we have 4 exams in 2 days flat. You can clear most if you are attentive in class and follow up on your assignments. This also means that there is greater focus on learning and understanding rather than expecting students to mug up and puke stuff out on the day of the exam.
Okay, before I get carried away, I still have 2 exams tomorrow. So Chao....