India in massive bear market – Sensex closes at 17,734.68
Babu Ghanta
Feb. 21, 2008

Indian stock market is in a state of devastating bear market far more severe than any other country. Some analysts point to severe domestic inflation that was suppressed by artificial price control over the petroleum products can explode into hyperinflation as crude oil decides to move into $100+ territory.

The Sensex which had plunged 458 points in the previous day's trading, closed with a gain of 117.08 points at 17,734.68.

The domestic players are overwhelmed with foreign money that poured in recently. In general, whenever foreigners bought in stick market ruthlessly and stampeded on the buy side, it was the end of major bull market. That happened in Japan (1988), and US (1999-2000).

India may have entered a Japan like bear market that stay there for more than twenty years. Analytical models say India has achieved optimal growth and prosperity. Things need to correct before the next leg of the bull market. The debt burden in the common people and the Government is similar to that in Japan in late 1980s. A prolonged bear market will be required to correct things.

Nikkei (Japanese index) lost 85% from the top. If Indian sensex loses 85% from the top, the bottom of the sensex may be at 3,000. But that will be a genuine buy point for decades and perhaps centuries.

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