Quantitative Easing part II. Nothing beyond the obvious. FOMC has decided to pump in USD600bn over 8 months i.e. USD75bn per month.What Fed will do is basically purchase Treasury securities and in turn flood the market with money. This is to boost consumer sentiment, tide over unemployment, basically pick up pace of the economy.
For India, the obvious advantage is increased capital flows. The party goes on much longer! BTW, cheer on retail investors, CIL has listed at Rs100 premium! Go beserk, pop those Champagne bottles...but be a bit sanguine...CIL trades at PER of 17-18x one year foward, people may say Neyveli Lignite trades at 20x, so why not CIL? My point is, no matter what it is, commodities can not trade at teen multiples! They are commodities after all! Warren Buffet has a point when he says he stays away from commodities, its because when the cycle is down there is little you can do to offset the downfall in demand or increase in price. Anyways for now, it will all be hunky dory because there is Rs30,000cr of money waiting to be pumped in the markets. Jai Ho for some time then....
