Sensex faces inflation worries and catastrophic energy price – a 50% fall possible in next nine months
babu Ghnata
Jun. 9, 2008

Rising oil prices and inflation worries pushed Sensex into a negative zone to touch a day's low of 14,846 - down 726 points from its previous close.

Analytic models show the real value of Sensex based on inflation expectations and oil price around $150 a barrel is close to 4500 and that is far below where it is today.

Realty, IT, capital goods and oil & gas stocks suffered the most today. The index recovered partially and touch a day's high of 15,203. But long term outlook is gloomy.

The biggest problem is the foreign money especially from America that has carried the market to above 20,000. The same American money managers that caused financial meltdown in their own country through subprime loans are also responsible for the catastrophic bubble in Indian stock market. The Indian government acted greedy seeking cheap money. Now all that Foreign Direct Investment and institutional fund money is running out of the country in panic.

The Sensex can be below 5000 in less than nine months unless Government disallows the foreign institutional investors to run away with the money

Sensex faces inflation worries and catastrophic energy price – a 50% fall possible in next nine months
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