This is my synopsis,deliberately devoid of too many statistics that support my view, on what’s likely to go UP and DOWN in 2010….This should help you form a view on Asset Allocation when rebalancing your Portfolio
OIL….from US $ 80 /barrel to US $ 110/barrel…..will cross and stay above US $ 150/barrel inside three years….not good for Importing India and it’s battle with reducing the Fiscal Deficit and Government Borrowings….Russia,which supplies 13% of the World’s Oil, threatening to close the Belarus route for Supplies to Europe,the volatile US-Iran situation,demand picking up and difficulty in maintaining 94 million barrels a day World Output would all lead to increasing the Price of Oil.
GOLD…..was bang on target past two years (check my blog for earlier Gold insights)…see further upmove to US $ 1250/oz this year as USA tackles rising record Deficits and Low Interest rates….and much more in the long term as we approach US $ 3000/oz and then even US $ 5000/oz in the next decade…with USA doubling it’s monetary base in 2009 and expected to increase it’s deficit,currently at US $ 1.4 Trillion,by atleast another US $ 7 trillion in the next decade,Gold will remain on a firm uptrend in the coming decade
METALS….as long as China and India continue to record high growth rates and a West Recovery gathers momentum,metals will see upmoves as will mineral resources like Iron Ore that feeds Steel
AGRI COMMODITIES….Ouch ! you name it !…all commodities are entering the ozone layer !…Sugar,Tea,Grains,Pulses….Food Inflation has eaten away wages and salaries in India…suddenly in 2009, Indian households were grappling with a surge of 50% in grocery bills on same quantities…Ouch !…..Don’t expect 2010 to bring any relief…so expect Sugar and Tea Producing Companies to record Non linear growth in Profits in 2010…Such Listed Companies have already recorded fantastic highs and will continue toperform strongly on the bourses in 2010 as profits are certain and visible
INDIAN RUPEE v/s US DOLLAR….The US Dollar is rebounding and made to look strong by a weak Euro…However the Rupee and the Yuan will strengthen against the US Dollar as India will yet again record strong Inflows of over US $ 20 Billion and China continues to buy more Gold and move more of it’s US $ Two Trillion reserves away from the US Dollar this year…The Rupee should close FY 10 in March this year at close to Rs 44 to the Dollar…It’s already reacted by over a percent to below Rs 46 in the first week in 2010….does not augur too well for Indian Exports,already hit by the recession in the West…and ofcourse the competitiveness of IT companies too will be impacted