Macro outlook

Discussed yesterday with a friend about the outlook for the next few months. Recession has already showed its face in the US. Though the actual situation may not as bad, it is the perception caused by the subprime problem that everything is not ok with the finance firms, which will hit and cause further damage. India has to face major problem due to the inflation which is primarily due to the high international commodity prices. My friend thinks that commodity prices will correct by 20%, though I feel that oil prices would not yield so soon and we could still see higher levels.
The 4th quarter results being announced already show a slowing of the growth, except for the telecom sector which has shown good growth. The margins though seem threatened even in that sector. We can see couple of tough quarters, but I am still optimistic about India's performance in the long term.

The market ahead

Last week I had an interesting discussion on the way ahead for the Indian stock market with someone who (to his credit) had predicted that the market was set to go into a bear market just before it went. Now, my friend thinks that the market is going to slide further during the next couple of months and his advise is to sell and move to cash using the increases in the market.
Though I admit that my friend has been on the spot predicting the slide, using his technical skills, I am more of a believer in fundamentals. I believe we should buy and hold the stocks that we know are undervalued. It is not difficult to find undervalued stocks when the markets are down. And according to me it is difficult to predict when the bear phase has ended. One could be left stranded with cash and then having to pick at higher values than currently available. I agree that the current market does not look positive and it is bound to fall further, but in the long term there is only one way to go.. UP!