Stock Market has crashed. where is next boom?

Indian stock markets were I have invested has crashed. what can I do now? I was reading articles and collected these information from multiple sources. I figured that there are choices for me to perform some action. they can be

One is to sit quietly with your decimated portfolio and pray for the good times to return quickly. Two, follow the advice these days. Third is look for a mix of macro and micro indicators has influenced stock market movements and make investments. There may be no cause-and-effect link between these factors and the rise in the Sensex. But close and careful observation of these indicator might give the answer to the question when to start investing , so that you may be in an almost perfect position to spot the next boom before others get to know of it. Some of the indicators are(difficult to observe for me).

  • A consistent GDP growth of over 6% and a rising index of industrial production (IIP), coupled with the expectations of their sustainability in the near future, are likely to push up the stock markets
  • The policies of the new government will be crucial for the IIP and GDP turnaround. This can happen only if we have a stable government that comes to power and lasts for at least four years.
  • investors should track the quarterly results from the third quarter of 2009-10. These results will tell them which stocks are likely to increase and whether the crash is about to end.
  • The one sector that participates in almost every boom is capital goods. This indicates that corporate’s have started investing in new business ventures, which signifies that firms envisage a growth in demand in the future.
  • FII inflows shouldn’t be forgotten as they constitute a major ‘liquidity’ driver for any boom to sustain over a period of few years. We can also look at the quality of FII money that’s pouring into Indian equities. If FII’s are pension funds and sovereign funds, they might be long-term investors. If FII’s are hedge funds, be a little wary as this money can vanish in a flash
  • There is an inverse relationship between inflation and the stock markets.Low inflation should lead to higher savings. These savings, after being put aside in traditional and safer avenues should be used to buy stocks. Therefore, only after the inflation falls and savings rise, there is an expected boom in stock markets.

If you are a smart investor, you will also be clued into what’s happening in other asset categories, especially real estate, both in India and abroad. A unique case among Indians including me is the fact that I first bought a property when I had money earning potential, and then only started to explore the more risky option of stocks.

Which one of these options I might end up doing? Time and changes in my portfolio will answer.