Will Stock market be in bear grip in 2008?- updated version-an astro economic analysis

This is an edited version of article first published on dec 13,2007 on all our three blogs ( www.kal.in, www.ckal.in and www.Indiaconsulting.in ) and contains some updated and corrected information

This article brings together information and analysis from domain of economics and astrology that may be relevant for predicting how the stock markets may behave in 2008 .Some statistical and political inferences are thrown to give an overall feel of markets in 2008. Since the article was published we cam across interview of financial astrologer Ashok Motiwani on CNBC TV 18 who gave a further corroboration of our predictions based on his astrological explanations/interpetations

1. World Markets: world markets are likely to go in to bearish phase especially US and rest of world following as recession fears in US are looming large (see recent articles in Money Week website). Housing/subprime crises in US and Europe will affect the networth of consumers with negative effect on spending and investment. The crises means that Banks and especially investment banks will have to curtail lending seriouly in order to maintain capital adequacy norms. Put another way, amount of money a bank has leads to multiplier effect on credit generation throghout economy and when th capital is reduced as will be the case with huge write offs by banks ( still unwinding) credit contraction will also be several times the actual losses of banks/FIs.Less and not so cheap credit will mean a much weaker economy in US and Europe and very likely rest of the world.In this scenario huge amount of money could be pulled out from stock markets. Given that markets are always subject to panic, greed and fear by turns, a bearish phase could well be preceded by severe market crash. Thus inspite of positive noises about Indian economy, we think Indian market could be as badly affected in short term because lot of FI money is in to India Funds and there are very few Buffett like investors who turn a blind eye to stock ticker once a great purchase has been made in stock markets

A situation of near staglation - inflation and slowng US economy could also put pressure on dollar vs rest of currency especially Yen leading to sudden unwinding of Yen carry trade as arbitrage opportunities under Yen carry trade have started to diminish with a buoyant Japanes economy ( thus end of era of zero interest lending in Japan) and lowering rates and depreciating dollar on the other.

Rising Oil prices could be another serious factor though oil prices unless driven by any unseen sudden political development(s) may be held back under a slowing world. Mr Ashok Motiani , the financial astrologer ( www.Indiamarketastrology.com ) in his interview mentioned that due to astrological configurations in 2008, oil prices could drop to close to $70 but gold prices could remain buoyant or at least not bearish till dec 2008) This seems to agree with the economic rationale but that does not rule spike in oil prices during course of the year well above $100

Finally an overbought Chinese stock market, should it collapse will have a domino or cascading effect like unwinding of Yen carry trade. ( It is mentioned in a Moneyweek article) that huge amount of investments around the world are on account of Yen carry trade hence any sudden unwinding ( condition for which are becoming ripe by the day) could have major stock market melt down effect.

Looking at past record of Indian stock market we are in to "eight year itch" ( in 2008) where Indian stock markets go bust every eight year or so( as stated in a CNBC Tv 18 article). Also note worse eight of ten Indian stock market have occurred occur in months of April-May (this could well be due to role of Sun transit) and only once in October.

The major astrological reason for a possibility of a bearish phase according to us is the transit of Ketu-Rahu from the 4-10 house where ketu is conjunct Saturn in 4th house of investments, property, and affecting the tenth house of political developments. Interestingly transit of Ketu is occurring end of April 2008 a time when statistically market crashes frequently happen, a time when company annual reports will flow in reflecting all the effects of currency appreciation, interest hike effects of the last one year. 2008 is closer to general elections in India and recent election results have raised new questions about timing of general elections. All in all we got a heady mixture for 2008 that could make for a bearish phase in stock markets but may not last very long According to Motiani, bearish phase will start in early May 2008 on account of retrograde Saturn. Our view has two aspects: that stock market cannot be perfectly timed on basis of transiting planets as our current astrology carries some mathematical mistakes of which astrologers are not aware or how to correct these mistakes ( Please read Swami Yukteshwarji' book The Holy Science on this aspect with great explanation of errors in astrology). Secondly events cannot be timed on basis of transiting planets as like human beings countries too have a birth chart and hence planetary period or dashas. Prediction cannot de done on basis of planetary transits alone. Dashas have to be taken into account. India is current running Venus-Mercury since 2005 ( hence the great bull run). From 2008 mid Venus Ketu will start which will last till Sept 2009. This period could see sharp movements in stock markets( both up and down) and while it is not possible to analyze the entire year Month July till August 2008 could be very volatile but with upward bias overall. This is because of conjunction of Ketu and Venus in third house ( along with other planets. Ketu and Venus conjunction often seems to give abnormal stock market behaviour as seen in last Sept-October when the same conjunction took place

As mentioned India,s horocope shows that India is currently under major period of Venus- lord of finance and luxury -which is lord of lagna . Start of Venus mahadasha coincided with India's rise from balance of Payments crises in early 90s and a period of rising GDP growth rate. This will last till 2009 ( not 2011 as mentioned in first edition of this article. But Venus is not free from affliction in India's horoscope hence all the scandals in market have come up from to time. In venus –ketu starting mid 2008, IT stocks could see big resurgence as also possibility pharma life sciences stocks, and certain communication technology stocks .

Sun mahadasha starting in 2009 will provide further impetus to stock markets as lord of fourth house.

Bull run will continue much longer than most of can imagine but due to kaleidoscopic nature of planetary dashsas there will be important corrections and Rahu Mahadasha starting in 2025 may not very great ( foreigners could very well take over the stock exchanges ownership!!! (also notice how Rahu in lagna of India horoscope in 1947 and coming back here every 18 years has been responsible for bloody scenes in India 1947,1965,1984,2002)

Also note sub dasha of mercury under venus ends in 2008 middle and ketu sub dasha starts providing an astrological conditons for sudden developments, excesses in stock marrkets, politics, financial scandals and political and economic partnerships

But overall we feel any corrections could buying opportunity

Disclaimer: All risks of outcome based on this article to be borne by trader/investor

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