Indian IT: Trouble Today, but Optimism for the Long Term-India Knowledge at Wharton
A closer look at the customer profile of the Indian IT sector shows why the industry is hurting. The U.S. accounts for 60% of the market and the UK another 18.5%. This is not too different from the respective values of 68.2% and 14.5% in financial year 2003-04. The current global financial problems began in the U.S., and it has been among the hardest hit countries so far. Analyzing the numbers along another parameter -- the verticals -- shows that the banking, financial services and insurance (BFSI) industry accounts for 41% of the business. The percentage has actually gone up marginally since 2003-04. And this sector is at the epicenter of the crisis.
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60% of all Indian IT revenue comes from US. And 41% of all Indian IT revenue is from the financial sector. This information shows how close the Indian IT sector is to the financial crisis. Less the number of fancy financial instruments; less the need for IT development to support them amd more the Indian IT sector is affected.
Saturday, February 28, 2009
Friday, February 27, 2009
The Economic Outlook: 2012 and beyond
The Economic Outlook: 2012 and beyond
A great analysis by Abbas Bakhtiar
Excerpts:
The current economic situation
Let me tell you in no uncertain terms that we are facing a synchronised global economic depression and I am not the only one that is saying this. In early February, the International Monetary Fund’s chief Dominique Strauss-Kahn said the world's advanced economies -- the U.S., Western Europe and Japan -- are "already in depression”. Gordon Brown, the UK’s Prime Minister also used the word "depression" to describe the global economy, although his aides quickly said it was a slip of the tongue.
The missing engine of growth
In contrast to the China, the United States has relied on consumers and the government for its growth. According to Peter G. Gosselin citing Roach of Morgan Stanley Asia, U.S. consumers constitute only about 4.5% of the global population, yet they bought more than $10 trillion worth of goods and services last year. In contrast the Chinese and Indian consumers combined which account for 40% of the global population bought only $3 trillion worth.
If we just look at the differences in consumption levels between US and China-India, we’ll see that these countries are not in a position or have the financial resources to pick-up the slack left by the US consumers
So who is going to take the position left vacant by the US and act as the world’s economic locomotive and pull the world out of the depression? The answer is no-one and everyone. US is clearly not able to do that much. As a matter of fact the US consumers have to get used to lower spending levels for at least a decade, if not for good.
The coming inflation
So far, all governments are reducing their interest rates to historic lows and at the same time spending a lot of money that they don’t have. It will take at least two more years for the economy to stabilise. Here we should note that by stabilise I mean an arrest in decline rather than outright growth. Once that point is reached we will begin to see the effects of the loose monetary policy: a tremendous rise in inflation which can be accompanied by low economic growth or in other words stagflation.
The fear of stagflation arises from the fact that from all indication, growth will not strengthen anytime soon. It is quite clear now that the US and to a large extent the European consumers have been hit hard by the current crisis. There is also the possibility that another banking crisis may still ensue such as the commercial real-estate mortgage defaults and above all the repetition of currency crisis (1997 Asian Financial Crisis). Already we see that China Japan, Korea and others are setting-up $120 billion currency defence fund to protect Asian currencies against speculative attacks.
The current economic crises have left many countries’ local banks with foreign currency loans that they find difficult to repay in that currency. This and the possibility of defaults have made these countries a good target for speculators. If such an attack starts, many countries will automatically have to devalue their currencies (even more than they already have) or try to defend their currencies. In either case this may trigger yet another crisis that may actually destroy a good portion of many economies around the world.
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Source:American Chronicle
A great analysis by Abbas Bakhtiar
Excerpts:
The current economic situation
Let me tell you in no uncertain terms that we are facing a synchronised global economic depression and I am not the only one that is saying this. In early February, the International Monetary Fund’s chief Dominique Strauss-Kahn said the world's advanced economies -- the U.S., Western Europe and Japan -- are "already in depression”. Gordon Brown, the UK’s Prime Minister also used the word "depression" to describe the global economy, although his aides quickly said it was a slip of the tongue.
The missing engine of growth
In contrast to the China, the United States has relied on consumers and the government for its growth. According to Peter G. Gosselin citing Roach of Morgan Stanley Asia, U.S. consumers constitute only about 4.5% of the global population, yet they bought more than $10 trillion worth of goods and services last year. In contrast the Chinese and Indian consumers combined which account for 40% of the global population bought only $3 trillion worth.
If we just look at the differences in consumption levels between US and China-India, we’ll see that these countries are not in a position or have the financial resources to pick-up the slack left by the US consumers
So who is going to take the position left vacant by the US and act as the world’s economic locomotive and pull the world out of the depression? The answer is no-one and everyone. US is clearly not able to do that much. As a matter of fact the US consumers have to get used to lower spending levels for at least a decade, if not for good.
The coming inflation
So far, all governments are reducing their interest rates to historic lows and at the same time spending a lot of money that they don’t have. It will take at least two more years for the economy to stabilise. Here we should note that by stabilise I mean an arrest in decline rather than outright growth. Once that point is reached we will begin to see the effects of the loose monetary policy: a tremendous rise in inflation which can be accompanied by low economic growth or in other words stagflation.
The fear of stagflation arises from the fact that from all indication, growth will not strengthen anytime soon. It is quite clear now that the US and to a large extent the European consumers have been hit hard by the current crisis. There is also the possibility that another banking crisis may still ensue such as the commercial real-estate mortgage defaults and above all the repetition of currency crisis (1997 Asian Financial Crisis). Already we see that China Japan, Korea and others are setting-up $120 billion currency defence fund to protect Asian currencies against speculative attacks.
The current economic crises have left many countries’ local banks with foreign currency loans that they find difficult to repay in that currency. This and the possibility of defaults have made these countries a good target for speculators. If such an attack starts, many countries will automatically have to devalue their currencies (even more than they already have) or try to defend their currencies. In either case this may trigger yet another crisis that may actually destroy a good portion of many economies around the world.
----
Source:American Chronicle
Wednesday, February 25, 2009
Market is ready to rally- Bottomed out ?
Double bottom on the S&P 500 was formed yesterday. Watch STO, RSI and the bullish engulfer candle. We are ready for major rally in the US markets !!!I may be too soon to call this a bottom; but let's watch it over the next few days
Tuesday, February 17, 2009
Gold Chart- Technical Breakout to $1000
Gold does a massive breakout. The chart says Gold is heading to $1000 as investors rush from stock equities into more safe havens like Gold and Treasuries.
Investors continue pull out from India; Asia sees inflows
NEW DELHI: Global investors continued their flight from India-focused equity funds for the fourth week in a row, even as inflows into Asia
tripled to $219 million in the second week of February, a latest report says.
Net cash taken in by offshore Asian funds tripled week on week to $219 million in the second week of this month, according to data complied by international fund tracking firm EPFR Global.
However, India and Taiwan dedicated funds remained alienated and witnessed redemptions for the consecutive fourth week, with the combined amount rising 20 times from the last week of January.
Global investors pulled out over $22 million within a week from India-focused funds taking their total outflows in the past four week to nearly $52 million, the report revealed.
Besides, Taiwan funds saw an outflow of 17.6 million dollar in the reviewed week.
Inflows into Asia (excluding-Japan) equity funds were broadly based, with Korea, China, Greater China and Hong Kong equity funds all taking in between 40-145 million dollar.
Source:Economic Times
Net cash taken in by offshore Asian funds tripled week on week to $219 million in the second week of this month, according to data complied by international fund tracking firm EPFR Global.
However, India and Taiwan dedicated funds remained alienated and witnessed redemptions for the consecutive fourth week, with the combined amount rising 20 times from the last week of January.
Global investors pulled out over $22 million within a week from India-focused funds taking their total outflows in the past four week to nearly $52 million, the report revealed.
Besides, Taiwan funds saw an outflow of 17.6 million dollar in the reviewed week.
Inflows into Asia (excluding-Japan) equity funds were broadly based, with Korea, China, Greater China and Hong Kong equity funds all taking in between 40-145 million dollar.
Source:Economic Times
Russian auto output down 80 pct in January
Russian auto production fell 80 percent in January compared to the same month a year ago, the government statistics agency said Monday. The drop was part of an overall 16 percent drop in industrial output.
The auto industry has been hit by shutdowns at major plants. Automakers AvtoVAZ, GAZ, Ford and Renault were shut down for an extended holiday period up to one month, and AvtoVAZ -- which is now working one shift a day -- also briefly halted production as it had difficulty with suppliers over late payments.
Russia's industry had been posting an annual 50 percent growth in the past five years and was on the way to become Europe's largest car market before the credit crunch made borrowing too expensive or inaccessible.
Industrial output was down even more sharply -- by 20 percent -- compared to December, the Federal Statistics Agency said in a monthly report.
Source: BusinessWeekMonday, February 16, 2009
Nouriel Roubini predictions for 2009
We are in the middle of a very severe recession that's going to continue through all of 2009 - the worst U.S. recession in the past 50 years. It's the bursting of a huge leveraged-up credit bubble. There's no going back, and there is no bottom to it. It was excessive in everything from subprime to prime, from credit cards to student loans, from corporate bonds to muni bonds. You name it. And it's all reversing right now in a very, very massive way. At this point it's not just a U.S. recession. All of the advanced economies are at the beginning of a hard landing. And emerging markets, beginning with China, are in a severe slowdown. So we're having a global recession and it's becoming worse.
Things are going to be awful for everyday people. U.S. GDP growth is going to be negative through the end of 2009. And the recovery in 2010 and 2011, if there is one, is going to be so weak - with a growth rate of 1% to 1.5% - that it's going to feel like a recession. I see the unemployment rate peaking at around 9% by 2010. The value of homes has already fallen 25%. In my view, home prices are going to fall by another 15% before bottoming out in 2010.
For the next 12 months I would stay away from risky assets. I would stay away from the stock market. I would stay away from commodities. I would stay away from credit, both high-yield and high-grade. I would stay in cash or cashlike instruments such as short-term or longer-term government bonds. It's better to stay in things with low returns rather than to lose 50% of your wealth. You should preserve capital. It'll be hard and challenging enough. I wish I could be more cheerful, but I was right a year ago, and I think I'll be right this year too.
Source: CNN Money/Fortune
Things are going to be awful for everyday people. U.S. GDP growth is going to be negative through the end of 2009. And the recovery in 2010 and 2011, if there is one, is going to be so weak - with a growth rate of 1% to 1.5% - that it's going to feel like a recession. I see the unemployment rate peaking at around 9% by 2010. The value of homes has already fallen 25%. In my view, home prices are going to fall by another 15% before bottoming out in 2010.
For the next 12 months I would stay away from risky assets. I would stay away from the stock market. I would stay away from commodities. I would stay away from credit, both high-yield and high-grade. I would stay in cash or cashlike instruments such as short-term or longer-term government bonds. It's better to stay in things with low returns rather than to lose 50% of your wealth. You should preserve capital. It'll be hard and challenging enough. I wish I could be more cheerful, but I was right a year ago, and I think I'll be right this year too.
Source: CNN Money/Fortune
Tuesday, February 10, 2009
Charles Nenner Predictions for 2009
Here are two videos from the Charles Nenner website . Charles Nenner provides some interesting predictions for the year 2009. I won't say he is always right but quite close.
http://charlesnenner.com/inc_files/2009-02-03-cn-cnbc.wmv
http://charlesnenner.com/inc_files/2009-02-03-cn-bloomberg.wmv
http://charlesnenner.com/inc_
http://charlesnenner.com/inc_
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