The latest market fall

[Wd40]

Here, someone has done the analysis of Sensex returns adjusted for inflation for the last 30 years.

http://wisewealthadvisors.files.wordpre ... ation4.pdf

Basically, if you take Yr 2000 as the base, the sensex has more than doubled, after adjusting for inflation. The table shows data only till 2012 when sensex was at 17404 and now Sensex is 26000.

[JR8]

Here, someone has done the analysis of Sensex returns adjusted for inflation for the last 30 years.

http://wisewealthadvisors.files.wordpre ... ation4.pdf

Basically, if you take Yr 2000 as the base, the sensex has more than doubled, after adjusting for inflation. The table shows data only till 2012 when sensex was at 17404 and now Sensex is 26000.

Woah!
- After year one, cash depo shrunk 11.3% (inflation adjusted)
- After year one, Sensex risen 6.9% (Inflation adjusted)
- Premium of Sensex vs FD = 18.2%!
- No wonder Sensex stocks don't feel it necessary to pay dividends
- No wonder Indians like buying gold!
- Most stressful job in the world, Sensex index options trader?
- What is making the index so volatile? A few stocks, or is it broader based (i.e. By stock selection could you materially reduce volatility?)

It would be fun to add columns to express the 'Sensex vs FD% premium' in contemporaneous US$ terms, or even in terms of ounces of gold But sadly I have to go and do the washing up now


p.s. If anyone were trying to derive the numbers on that table and having a bit of trouble... I reworked line 1 in Excel (in units of 1k, rather than 100k 'Lakhs') to help figure it out, so just ask. It is not exactly intuitive!

.... and after all of that, only now do I see the table has a 2nd page.... definitely washing up time!

[Wd40]

1979-80 were really bad years, there was an emergency declared in the country. It was probably the worst times for the country. India's economy opened up to foreign investment only in 1992, when there was balance of payment crisis, after which the economy really picked up. There was an Asian crisis in this region in 1998 but India was pretty much immune to that, because its markets were still not fully exposed externally.

If you think India is volatile. You still haven't seen Indonesia, Thailand, South Korea.

Interesting read:

http://en.wikipedia.org/wiki/1997_Asian ... ial_crisis

Indian markets are inherently volatile because they are not as liquid as western markets. The market cap of TCS which is India's top company by market cap is 84B USD and the market cap of HSBC is 129B GBP.

But if you look at their free float:
http://markets.ft.com/research/Markets/ ... ?s=TCS:NSI
http://markets.ft.com/research/Markets/ ... s=HSBA:LSE

TCS is 511m while HSBC is 19.14Bn

http://www.livemint.com/Money/DgsaN19cb ... float.html

TCS stock fell by 9% yesterday because its earnings were lower than expected. So you get the picture:

https://uk.finance.yahoo.com/news/tcs-s ... 56285.html

These stocks trade at very high valuations as they have lot of future earnings expectations built into them. TCS trades at 22 times its earnings and one quarter if results are bad, its stock gets wacked.