Fear the bear : Markets Injured

Here comes a lot of disappointment and stress amidst what seems to be a depressing phase for the Indian economy and its investors as a whole. All the sectors continue to be beaten down inevitably restricting growth prospects of the economy. What rides this fall-down is the clear adamant attitude exhibited by the policy makers who have decided to rein in prices, sacrificing economic growth.

As I quote - "There is a possibility of another 10% correction in the Indian market near-term, as the impact of the RBI's rate hike sets in," said Saurabh Mukherjea, Head of Equities, Ambit Capital.

India's Sensex is the worst performer in Asia this year with a 10% loss after returning 17% last year. Investors worry that steep valuations, possible slowdown of the economy, could squeeze corporate earnings . A 20% fall in key indices is broadly accepted as a bear market. The BSE's 30-share Sensex fell 65.33 or 0.35%, to 18469, extending losses for the eight straight day. The NSE's 50-share Nifty dropped 28.10 points or 0.50%, to 5537.15.

The RBI on Tuesday raised the rates for the ninth time in 13 months to fight inflation that is well above the comfort level. Governor Duvvuri Subbarao said, "Inflation is inimical to sustained growth as it harms investment by creating uncertainty. Bringing them down, therefore, even at the cost of some growth in the short-run, should take precedence."

Economic growth forecast for this year is at 8%, down from 8.6% last year. Foreign funds have pulled out close to 2,000 crore in the last few days, including Wednesday's provisional figures.

But, a sustained economic growth requires some tough measures to cool prices. An economic slowdown now is needed to control inflation and investors may need to brace for some pain in the short-term. Thank You!