The Indian Capital Market.

The Financial and Capital markets are currently in a precarious state primarily because of pre-election pressures. The threat of a higher inflation rate and higher interest costs along with a falling rupee could lead to economic instability. We expect that the first signs of political stability should bring in vast foreign capital and it has happened. The first signs that the election results would not drastically change the economic environment especially the reform process has brought back the FII's. Almost $ 2 billion dollars has been invested in the past three months alone driving the Sensex (The Bombay Stock Exchange Equity Index) up over 30%. If this trend continues along with increasing foreign direct investments then we may witness , decreasing interest rates and increasing production keeping inflation largely in control. Two such years and by the third year the rupee should be fully convertible on the capital account. The present Capital Market scenario:

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