The break of 5348 confirms that the post March rally was a bear rally and that is the most important piece of evidence for this. As the Market kept doint its own thing thanks to RBIs muted policy rate increases it took time to take a call on the possibility of a Kf cycle extention. Just because the US managed to extend its Kf Autumn for 16 more years than analysts on the subject expected niether kills the theory nor justifies why everyone else should be able to repeate the same wonder. Unless you own the reserve currency of the world are the biggest consumer of the world and have accessto markets for low cost production, that feat can only be done by a world power at the height of its reign.
UK did so in its time with colonisation and the US did with Globalisation. What I am referring to is the key ingredient that postpones the onset of a deflationary winter with deleveraging and recession as key components. In other words keep the Kf Autumn,which is marked by speculation in an envirionment of growth amidst historically low interest rates, continue longer than its usual average of 8 years. An economic autumn occurs because before it inflation appears to have come under control and rates were lowered to very low levels. Typically in 8 years these low rates allow debt to balloon to unsustainable levels.
UK did so in its time with colonisation and the US did with Globalisation. What I am referring to is the key ingredient that postpones the onset of a deflationary winter with deleveraging and recession as key components. In other words keep the Kf Autumn,which is marked by speculation in an envirionment of growth amidst historically low interest rates, continue longer than its usual average of 8 years. An economic autumn occurs because before it inflation appears to have come under control and rates were lowered to very low levels. Typically in 8 years these low rates allow debt to balloon to unsustainable levels.
An Autumn extention therefore needs keeping rates low without kicking in inflation. Colonisation and Globalisation allowed moving manufaturing to cheaper destinations or to buy inputs cheaper, thus inflation was controlled for longer than would have been normally and the cycle went on. But nothing goes on forever.
The Kf winter always follows once the Arbitrage is over, and the sister countries also pile up enough debts or a worsening social mood that makes them financially unviable. The Kondratieff cycle[Kf] was not a time cycle but a flow of events in a pattern over time.The question for the last 6 months was whether India could repeat those wonders. Despite the double digit inflation in CPI and Food RBIs slow policy action allowing for growth made you believe that the Government and society was working towards an alternate outcome but the recent aggressive stance and policy freeze continues as an issue. In the meantime the stock market action and its wave structure confirms the bearish outcome. So irrespetive of what it may look like in terms of a short term bounce the eventual result of the market should be more significant downside.For indians recession and deflatoin are words unheard of and most disputed as even a remote possibility. Yes the triggers for 8% GDP growth exist but with India's total debt [public+private]at 150% of GDP its only possible if both inflation and
The Kf winter always follows once the Arbitrage is over, and the sister countries also pile up enough debts or a worsening social mood that makes them financially unviable. The Kondratieff cycle[Kf] was not a time cycle but a flow of events in a pattern over time.The question for the last 6 months was whether India could repeat those wonders. Despite the double digit inflation in CPI and Food RBIs slow policy action allowing for growth made you believe that the Government and society was working towards an alternate outcome but the recent aggressive stance and policy freeze continues as an issue. In the meantime the stock market action and its wave structure confirms the bearish outcome. So irrespetive of what it may look like in terms of a short term bounce the eventual result of the market should be more significant downside.For indians recession and deflatoin are words unheard of and most disputed as even a remote possibility. Yes the triggers for 8% GDP growth exist but with India's total debt [public+private]at 150% of GDP its only possible if both inflation and
interest rates stay low. A potentially rare possibility unless we can start outsourcing to someone else.
Refer : PDF attached.
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