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India Update December 2011

The situation in India broadly remains the same as the previous update - with politics back to the fore. Indian markets have however recovered from their lows following optimism on a credible resolution to the Euro crisis and are currently ruling slightly above our forecast levels for end December 11 (S&P CNX NIFTY at 5039 versus our forecast of 5000).

While it remains virtually impossible to predict the actual levels especially as we enter a critical week as far as the Eurozone crisis is concerned, we do believe that the world's economicsĀ has fundamentally worsened and that a sharp rebound in the real economy is some months away - and any sharp rallies therefore in Indian stocks should be used as opportunities to exit stocks.

We have now however changed our stance on Indian bonds to positive as we believe the upsides on Indian long term bonds is far higher than potential downsides.

Our favorite picks for 2012 remain the same as the earlier post (Stocks you wont find at Macy's).