The Global Recession Again?

Measurements 55% increase in Sensex, 92% increase in S&P over last five years
A lot of Help Growth fuelled by FIIs, DIIs, bailouts, loose Monetary Policies, Capital injections in the form
of quantitative easing
Not Helped much But a Capital Aid has not helped much to create and sustain the economic growth
Lagged Indicators Economic indicators giving signs of another Recession
--------------------------------------------------------------------------------------------------------------------------------------------------------European Situation gotten Worse Sovereign Debt Crisis.
Extraordinary steps taken by ECB, European Union & IMF like quantitative easing have been bailed out
repeatedly with mandatory austerity measures imposed on their populations
No Growth Such measures may have also restricted growth by reducing aggregate demand and keeping the
debt burdens in these nations high
Impacting Nations PIIGS (Portugal, Ireland, Italy, Greece & Spain)
A Small Portion Greece itself represents a relatively small portion of the Eurozone
The fear If Greece leaves the European common currency (the so-called Grexit), other PIIGS countries will
follow and contagion will spread, putting an end to the euro experiment
A collapse of the euro would have widespread negative consequences for the world economy, perhaps
bringing on recessions
--------------------------------------------------------------------------------------------------------------------------------------------------------The Chinese Bubble
Opening Accounts Chinese markets ran up in the last 15 months, with unprecedented participation by locals
(300 million new trading accounts were opened since January 2015)
The Borrowing Opening up of margin trading or the facility to borrow from finance companies to buy stocks
fuelled this bubble. Frenzied buying of IPOs ensued even as simple households turned stock speculators, many
mortgaging homes to buy stocks and turn rich
Fallen & Falling The collapse of this bubble is playing out now, with the markets having lost more than 30 per
cent and falling. In a crisis, people will sell whatever they can
The Ban Government tried to ban selective stocks to stop selling off which will simply extend the sell-off to
other assets
Commodity Prices Commodity prices have been falling and are likely to get worse. The impact on commoditybased economies such as Australia, Russia and Latin America, can be intense

Asian Countries Asian exporting nations faced a serious fall in demand for goods. In a role-reversal, they
turned into importers of capital goods from developed countries. Japan's revival rode on Chinese imports
and the Eurozone and America pinned their hopes on export of capital goods to Asia, especially China. If
China's capital investment machine comes to a halt due to its capital market crisis, the deflationary
pressure on the world will be huge
-------------------------------------------------------------------------------------------------------------------------------------------------------Impact on Indian Economy
Corporate Profitability It is old story Corporate profitability has not risen as expectations and investors
are waiting and hoping for another 2-3 Quarters
Commodity & Oil Prices Importing nation will benefit from low commodity and oil prices. India is
domestic consumption driven and do not export much
India FX Reserves Indian Government is ready with $354.52B FX Reserves. During last fiscal year, the
RBI added $61.4 billion to the reserves against $15.5 billion in the previous fiscal year. In the first two
months of this financial year, it has already mopped up $8 billion to the buffer. India has decisive
government that can act in a crisis. But a global crisis will channel itself through a demand for liquidity
The Uncertainty As the uncertainty increases a sell-off in Indian equity and debt markets is very likely as
the Chinese story plays out. This will put the rupee under pressure. We do not earn the dollars we need
for our imports, but depend on global capital to fill the gap. An astute RBI has built reserves aggressively
and delayed the interest rate cuts. It is in fighting position to defend the currency but not entirely
prevent depreciation.

Sources Economics Times, ET Wealth, Investopedia

--------------------------------------------------------------t-h-e----e-n-d-----------------------------------------------------------------------