The other day I was with a client who made me think about the Crude Oil price drop on a different thought process. Till then I was of the thought that Crude Oil has hit its top and the prices are down for good. It will not go beyond $80, because of Shale gas discovery which make oil Oil available at $80.
Crude market getting more bearish after it broke the $ 62 mark on the international markets meant that all the producing countries are scrambling to sell their stock before the price drops further, in contrary to the experiences that we have had so far with OPEC controlling output just to keep the supply at bay so that demand takes care of the price.
I also got informed that when Crude price crashes more than 40%, it will have a similar impact on the stock market and was given the example of 2008 crash. Though I did not buy this thought fully, I got into a learning mode, why not it be so? From then on, all the information I was searching or working with I used to find co-relation to the thought I had received and mostly it did match. I don’t know if that came because of my mind set which attracted them.
Today I saw an article in Economic times with a graph of Crude in comparison to SENSEX. It just caught my attention. Here is the chart…….
As it was said, the stock market went along with Crude when it took a slide in 2008. But, what is happening now is totally opposite, it is opening out like a jaw, this gave me perspective to think. If this time it is different, when was it similar earlier. In 2006, when crude went down, the stock markets were up. From there what happened was history. The stock markets went into a very high bull power. That means, this time it will repeat the same. One important note here, this time the power is far higher than what it was earlier.
So, Nifty reached 125000 by 2030, which was a very optimistic gesture of Rakesh Jhunjhunwala, would be a real possibility.
Folks, be invested, take opportunity of India’s historic growth.