Does Economic Woes really matters in markets?

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Refer the attached word documents for graphs.
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Does economic woes really matters in stock markets?

We all know American and European regions are facing worst economic problems they are facing for 4-5 decades. The most optimistic forecast for America is a GDP growth of 1.5% this year. Europe situation is far worst. The most optimistic GDP forecast for Europe is (negative) -0.5%. Not a GDP growth, but a contraction.
But look at the performance of their share markets. There was a drastic drop of market indexes, in the middle of last year, which lasted only about a month. After that there was a steady upward movement and all the major indexes are showing a growth of more than 15% for last six months. Most of the indexes have already reached the peak performance of the early part of the last year.
This is the same for almost all major Asian markets.

But what’s happening to ours?

The worst GDP forecast we do have is from Standard Chartered, which is 6.75%. All other independent forecasts are showing a growth of 7-7.5%. Though CBSL earlier forecasted 8.5% growth, now they have come down to a more realistic forecast of about 7.5%. Whatever the case a growth of around 7% is a huge achievement.


Then, what’s the problem with CSE. Why it’s not reflecting the country’s real growth prospect. Are we not mature enough? We have to accept this to a some extent, as our market performance is very volatile. When the euro region debt crisis broke out, European and American markets fell drastically. But look at the recovery of those markets, within six months they have reached the peak point when the economic outlook remains gloomy.

But our market is dropping continuously for last thirteen months, despite healthy economic outlook (of cause balance of payment crisis and HR issues are short term).

Then why this “Kolavery … Kolavery Di”?
https://www.youtube.com/watch?v=YR12Z8f1Dh8

I see two reasons?

1. Using of “Technical Analysis Forecasts” to manipulate the market.

It’s quite evident; some biggest players (not investors) are publishing TA forecasts for market manipulation. Some people may not agree with me. But it’s seem to be true.


2. For some reason, some party/authority wants to keep the market down.


I strongly believe this.


I am in this market from 1996. There were ups and drops in the market. And there was a time it was totally dull. But then there were more than enough reasons for the dullness.
Open for Discussion.

Refer the attached word documents for graphs.

Thanks Hariesha.

Hariesha,

Thanks for some good points. But should this be in Talk section for a discussion. Would be great if you post this in talk and not in research. The research is more suitable for research reports with read only and not discussions.