Obama vs Goldman 'Oil' Sachs - PART II - Crude Capitulates - the Obama Effect ! - as predicted.

On September 5th we had written .....' Crude oil prices have since come down to around $105-110 levels currently. However, Goldman Sachs is still very bullish on crude and has once again put a target of $150 on crude by year end. With the US election date fast approaching, we will soon have the political pundits coming out with a constant dose of opinion polls on the chances of both presidential candidates. Positive swings in favour of Obama could well signal a negative on crude oil prices and negate the Goldman effect....' Since then Obama has taken a bigger lead over McCain in the opinion polls / presidential debate points nearer to the fast-approaching presidential elections. Consequently, as predicted, crude oil levels have now come down to $70-75 levels. Even the obstinate 'Oil Bull' Goldman Sachs has substantially scaled down its future outlook on crude prices despite having predicted oil prices to be at $150 by year end 6 weeks back - around September 5th.

'Bear' Market's been the only Reality and How???

In April 2006, the Sensex scaled the 12,000 mark for the first time ever and this has been the pivot point for the Indian Stock market eversince. Infact, over the last 31 months since this historical peak was first conquered, we have had the Sensex revisiting the 12,000 odd mark almost as a reality check in as many as 22 months out of the last 31 months. Therefore, approx. 71% and a whopping majority of the overall time in the ensuing period was spent around 12,000. Evidently, Sensex levels between 13,000 to 21,000 was merely an over-hyped aberration. Fundamentally, if at the current index level of 9,975 the Sensex PE stands at 12.60 (per reports in financial dailies), at the pivot level of 12,000 the PE was at a more realistic and reasonable level of around 15. That being so, between 13,000 - 21,000, the PEs were in the high-end of the illusionary range of 17- 27, and therefore, lacked sustainability. In the overall scheme of things, markets have many a time in my experience swung between extremes. After having done so, it is almost magnetically pulled towards the plausible levels (12,000 in our case) most of the times - as evidenced above - with Micro and Macro factors acting as catalysts. I trust the markets to surely have a way of correcting the excesses too after having often over-stretched itself on either side - but can we ever live to see the last of it ? Take a call !

Take a bow !!! Our September 1st BEAR CALL on the Indian Stock Market - SPOT ON !!!

We were perhaps one of the biggest contrarions on September 1st, 2008 and perhaps the motley few who could accurately read the BEAR TREND in the market well ahead of most. Reliance Industries is currently at Rs.1,306 (down 39% from Rs.2,136 on August 31) and the Bombay Sensex at 9,975 (down 32% from 14,565 on August 31). Approx. 4,600 points have got wiped off the Sensex in only 6 weeks since our prediction led by heavy-weights like Reliance Industries.