The equity markets will improve in 3 months, 7 months, 9 months…..you have heard them all, have you not?

Let us see what is likely to happen in 3 months. The global auto market will not improve, we cannot see any great recovery in the US auto – so the Indian suppliers will not benefit.

Engineering, Cement, Oil, are 3 sectors cannot make any serious money. Similarly banks (largely making money on selling life insurance) who have pumped a lot of money in building distribution will not make too much money if the economy slows down, and they cannot sell too many mutual fund schemes or unit linked plans. The IT sector will eagerly watch what happens to Satyam. Knowing India’s past bail outs, the shareholder will be left sucking his thumb. The employees, vendors etc. may get some protection. However the best clients and the best employees will run!

So frankly the equity markets cannot go up in the next 3 months. Is this a fair enough conclusion?

Sadly, no. The equity markets go ahead of times – look at DLF it has fallen 80% from its peak. Not that real estate prices have fallen 80%…so if the market (real estate) does go down by a smaller number, DLF shares might actually go up.