What they don't tell you in corporate media.

Wednesday 29 October 2014

US Fed ends QE3. Effects on India


1. Dollar rises and rupee falls.
2. FII money slows down in India. Growth in stock prices in India may be limited.
3. Gold price may not fall much in rupee terms as both rupee and gold fall in terms of dollar.
4. RBI may not reduce interest rates to avoid rupee falling further.
5. Due to global slowdown, oil prices may stay low and with our 8% interest rate in India, inflation may fall or not go up.
6. When Fed talks of raising rates in US in 2015, rupee may fall even further and our FM Mr Jaitley may stop asking RBI to lower rates to avoid fall in rupee further.
7. Stock market volatility will increase. With already low central bank cheap money and high valuations in stocks, we may see lot of swings. If Fed does decide to raise rates in 2015, we may even see dramatic collapse in stock market.
8. If you are a retired person with fixed return investments, it will be good for you. If you are younger and are in stocks, then not so good.

But, I doubt Fed and other Central Planners can really allow stocks to fall badly. They may then reduce the rates again or announce another bond buying program or QE4. We will see.

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