- US recession is nearly 'confirmed – question now is how deep and how long will it last
India slowdown confirmed. We are very likely headed to a full blown recession. We seem to be following US footsteps with a 6 mths lag. (and US was in a denial mode on slowdown/ recession 6 mths back) - Corporate / Bank results likely to be hit due to derivative impact – not sure how widespread it would be.
- 2009 elections uncertainty
In similar situation in 2002 and before, the market retraction has been more than 50%. We are very likely to see 12K levels in sensex within 3-6 months. If recession, then 10K expected to be breached in 12-18 months.
Suggested strategy (assuming fresh cash available !) – invest 25% right away – 50% when the market breaches 12K – remaining 25% at 10 breach. - buy only blue chips. Any monthly savings to be held off and invested at 12 and 10 breach.
Existing holdings – Hold on to blue chips (ACC, Reliance, L&T, Bharti and likes). Sell the rest and take a hit.
Strategy based on 5 year cycle.
