Synopsis
The fact that the Nifty and Sensex have witnessed a sharp decline at a time, that Hang Sang has moved up, the talk on the street is that Chinese economic recovery will lead to money flow into China rather than India. Now there are a couple of things which need to be understood, before one reacts to ticker and what the headline and back of the envelope analysis is showing. FIrst there are many shades of economic recovery. Just because the government wants, it could even be communist government which is all-powerful and takes multiple steps for an economy to recover, it may or may not recover. Second, assuming that because metal prices are rising that means that the user industry might see a pressure in margins might also not be true in a number of cases.
Before one takes a decision to buy or sell stocks on the basis of the current narrative on the street which is that the Chinese economy is likely to see a recovery and a certain chain of events will take place. It would be better to ask some questions. First question, if there is economic recovery in China, would the Chinese companies be more aggressive in dumping their product across the globe or because of rising domestic demand, it would be
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