Dear friends,
The expected move from the Central bank of China happened over the weekend. They have increased both the deposit rates & the bank reserve ratio to bring down liquidity & cool down the over heated economy and to reduce the investors' risk in case of a bubble burst in their Stock market. Our memeory is still fresh as to how the world markets reacted so much in panic during the last fall in China Stock market 2 months back. Is it going to be the May Month effect I referred to in my last post? Dont Know. But the fact that the exchange regulatory authorities talk of a possible bubble has to be taken seriously, I suppose.
With U.S.dollar weakening, the I.T companies with large dependence on dollar exports are already feeling the pinch. Interest rates are sufficiently high enough to attract lot of money to debts, being risk free.
With so much being talked abt Indian Economic Growth & Stock market Boom, only the early investors(as usual) who got in during 2003-04 & are staying invested till now are seeing big gains. On a year on year basis, from 18th may 2006 to 17th May 2007 - Index has given 18-19% return P.A which is good but nothing extraordinary. And remember the golden rule - The higer the base the steeper can be the fall. So be on the guard & adjust your portfolio accordingly and take only that much risk which you can withstand.
Happy Investing.