Panic again. Some people are telling its basically nothing more than a fear factor.
But the truth is really painful. Once considered a fool-proof financial markets are now looking for some hide-outs.
All it started with a sub-prime and housing crisis in US an year ago. For the past 2 months its bleeding all over the world markets. US has indeed did a lot of ad-hoc measures to fix this issue. But it seems it will take a heavy toll before it cools down.
Banks around the world are pumping in money into the markets to prevent them from a free fall, but with a little success. Russian markets are halted for the seventh time in a month. Indonesian markets also shut down for a while today. US in 5 year low. Nikkei at unprecedented low, seems at once in the danger of trading halt today. Indian markets are also trading at their 2 year lows.
Most of the theories of emerging markets insulated from US have been proved wrong this year. After all, it started as a problem in US, now spreadding all over the world credit cruch. A global recession seems for sure now.
Its time to look for a new world order with a new financial system in place. More importantly, a need for a new global currency (not dollars, not euro, not yuan) and a global regulator in place with a considerable representation of all the economies in the world.
It may be a distant dream, but for sure, somebody has to take the responsibilty for all the happenings now. Thats possible only with a new system.
Wednesday, October 8, 2008
Friday, September 19, 2008
Testing time for all the theories...
For the past few days, it has become a routine that some or other news from US is sending the stock markets across the world to their lows. Experts across the world are not able to analyse (predict) with all the possible theories they know about the financial markets. After all, nobody expected three of the top five investment banks in US to go under. And one more among them is on sale now, and there are murmurs of the last one seeing the end of the road soon.
Thus, it is common for a common man to believe that no banks in the world is subject to solvency. Some people in South India may be aware of a rumour (just a rumour) of ICICI bank bankrupted !!!
The happenings of the past one week is really disturbing and painful for all the market participants and is creating panic among the bureaucrats of all the governments. Russian stock market lost more than 15% on Monday and was shut down. Russian government injected a couple of billion dollars into the markets the next day, still, the sentiment went down again as it went down by 7% more which resulted in shutting down for the second day. And now, the Russian government announced that markets will be shut down until Friday.
AIG bailout by the US government did not boost sentiment for US markets as they plunged to their worst one day performance on Tuesday after Sept 11 attacks. As expected, Wednesday started with another bloody day for the Asian markets. Hang Seng was down by 7.5% at one point of time and Indian markets opened 5% down. Central banks from US, Canada, European Union, Britain, Switzerland and Japan came into action and injected billions and billions of dollars to boost the sentiments.
This created relaxation and the Asian markets suddenly cooled down. But when US markets opened Wednesday, it again went down with rumours of possible merger of Wachovia and Morgan Stanley, and Washington Mutual's auction process.
It seems markets are reacting strongly and madly to news flows and speculations. This is the excuse given by market optimists. But for pessimists, this is just the starter of worse to come.
Yes, it is definitely a testing time for all the financial market theories.
Thus, it is common for a common man to believe that no banks in the world is subject to solvency. Some people in South India may be aware of a rumour (just a rumour) of ICICI bank bankrupted !!!
The happenings of the past one week is really disturbing and painful for all the market participants and is creating panic among the bureaucrats of all the governments. Russian stock market lost more than 15% on Monday and was shut down. Russian government injected a couple of billion dollars into the markets the next day, still, the sentiment went down again as it went down by 7% more which resulted in shutting down for the second day. And now, the Russian government announced that markets will be shut down until Friday.
AIG bailout by the US government did not boost sentiment for US markets as they plunged to their worst one day performance on Tuesday after Sept 11 attacks. As expected, Wednesday started with another bloody day for the Asian markets. Hang Seng was down by 7.5% at one point of time and Indian markets opened 5% down. Central banks from US, Canada, European Union, Britain, Switzerland and Japan came into action and injected billions and billions of dollars to boost the sentiments.
This created relaxation and the Asian markets suddenly cooled down. But when US markets opened Wednesday, it again went down with rumours of possible merger of Wachovia and Morgan Stanley, and Washington Mutual's auction process.
It seems markets are reacting strongly and madly to news flows and speculations. This is the excuse given by market optimists. But for pessimists, this is just the starter of worse to come.
Yes, it is definitely a testing time for all the financial market theories.
Tuesday, September 16, 2008
Indian IT & Pink slips
The world markets probably started with one of their worst ever week opening this week with a terrible news of Lehman bankruptcy. It could not have been a worser news than this at this current market turmoil.
And as expected indices across the world reacted plunging to their lows this year. Lehman bankruptcy came with one more surprise yet a bloodier one, Merill Lynch sold out to Bank of America. It is now certain that the US financial industry is seeing its crack because of one of the worst ever mortgage crisis it has ever seen.
And the story does not end here. AIG seeks more around $40B bridge loan from Government to prevent it from failing. It seems WaMu and Wachovia are also next in line.
People were confident that FED will bailout LB as it did previously this year for Bear Stearns, Fannie and Freddie. There were voices when FED bailed out these companies criticizing that tax payers' money should not be used to bail out failed companies.
Those voices seems to be smiling now with LB filing for bankruptcy. This resulted in bleeding of not only US financial system, but also across the world. The disaster will be known only in a day or two when those get affected will be out atleast a day later. It is believed that some of the big European banks will also follow suit.
The sub-prime mortgage crisis started last year seems to be seeing its real victims now. Some more pain may be left in the market before it reaches its peak of pain.
The world is watching.
But at the other end of the globe, in India, IT companies and IT employees are eagerly watching these developments. More than 30% of the revenue of top Indian IT firms are from these US financial giants.
Pain for them means equally pain for Indian IT industry also. Already affected with a slowdown concern across the globe and affected by Rupee appreciation last year, Indian IT firms are in for one more trouble.
Affected by the sudden appreciation of Rupee last year to 39 levels, Indian IT firms started hedging in Re Vs $. This very hedging backfired as Rupee surprisingly depreciated to 46 this week and there is no sign of it turning back its movement.
Affected by all these turmoils, Indian IT bellwethers started giving pink slips, surprisingly, in 1000s. It is certain that global financial turmoil will continue and slowdown persists for some more time, we can expect more pink slips from Indian IT industry.
And as expected indices across the world reacted plunging to their lows this year. Lehman bankruptcy came with one more surprise yet a bloodier one, Merill Lynch sold out to Bank of America. It is now certain that the US financial industry is seeing its crack because of one of the worst ever mortgage crisis it has ever seen.
And the story does not end here. AIG seeks more around $40B bridge loan from Government to prevent it from failing. It seems WaMu and Wachovia are also next in line.
People were confident that FED will bailout LB as it did previously this year for Bear Stearns, Fannie and Freddie. There were voices when FED bailed out these companies criticizing that tax payers' money should not be used to bail out failed companies.
Those voices seems to be smiling now with LB filing for bankruptcy. This resulted in bleeding of not only US financial system, but also across the world. The disaster will be known only in a day or two when those get affected will be out atleast a day later. It is believed that some of the big European banks will also follow suit.
The sub-prime mortgage crisis started last year seems to be seeing its real victims now. Some more pain may be left in the market before it reaches its peak of pain.
The world is watching.
But at the other end of the globe, in India, IT companies and IT employees are eagerly watching these developments. More than 30% of the revenue of top Indian IT firms are from these US financial giants.
Pain for them means equally pain for Indian IT industry also. Already affected with a slowdown concern across the globe and affected by Rupee appreciation last year, Indian IT firms are in for one more trouble.
Affected by the sudden appreciation of Rupee last year to 39 levels, Indian IT firms started hedging in Re Vs $. This very hedging backfired as Rupee surprisingly depreciated to 46 this week and there is no sign of it turning back its movement.
Affected by all these turmoils, Indian IT bellwethers started giving pink slips, surprisingly, in 1000s. It is certain that global financial turmoil will continue and slowdown persists for some more time, we can expect more pink slips from Indian IT industry.
Thursday, June 26, 2008
Time to enter
The hope is almost lost? Not yet.
This year has been already the most dangerous year so far for both the investors and traders. There has been reports of billons of dollars losses in the indian markets alone. Incidently, Indian markets has become one of the chapest markets now. Its really a good time to invest in the Indian markets. Remember only invest, donot ever try to trade now atleast till the really dangerous inflation go below 8%.
Also be ready with some more cash in hand. There will be many more chances to enter in the coming 2 quarters.
This year has been already the most dangerous year so far for both the investors and traders. There has been reports of billons of dollars losses in the indian markets alone. Incidently, Indian markets has become one of the chapest markets now. Its really a good time to invest in the Indian markets. Remember only invest, donot ever try to trade now atleast till the really dangerous inflation go below 8%.
Also be ready with some more cash in hand. There will be many more chances to enter in the coming 2 quarters.
Friday, February 29, 2008
Budget 08 - Who is the winner?
There has been a large number of views on the Budget 08. Most of the views from the Inc and the common people has nothing great to worry, as this is a election year budget. The clear winner for this year's budget is going to be the Indian middle income class people and the farmers who are in so-called losses. There are so many resons for the middle income people to feel relaxed. After all they are the boosters of the consumer spending in the economy. The income tax slabs modifications, particularly for those who are in 3-5 lakhs is going to help them to spend 3-4k per months thus increasing their spending. Also some reductions in taxes for small cars is also going to help them a lot. And with respect to farmers, the FM clearly made a googly thus making this budget a 'successful' 'populist' budget.
Saturday, February 16, 2008
Reliance Power - Whose failure
It was never thought that a big IPO like Reliance Power will fail in a bullish market like India. But nature and markets are very clever and unbeatable. To some extent markets always master humans. Yes, everything came to light after 3rd week of January. Even Anil Ambani would not have thought that Reliance Power IPO will be a big failure in markets.
Reliance Power came for subscription when Indian markets are at their peak. Every normal Indian who do not venture into stocks was thinking of that they didnt utilise the opportunities of Indian stock market boom. Then came the Reliance Power, the mother of all Indian IPOs so far. The strange thing was that every analyst is bullish of this IPO, though the company did not have any revenue so far. Even the pessimisic analysts were saying that one can invest even though fundamentals are weak.
The greed to gain money in a short span of time makes the retail investors to subscribe for Reliance Power IPO. It was heard that some 2 lakh DeMat applications were pending with NSDL in those 2 weeks. Many HNIs were hedging their money for the IPO.
But came the crash which mada almost everyone poorer than ever. Suddenly all the IPOs seems to be bad. Even 3 IPOs were withdrawn last week. Reliance ower made its debut with a huge loss to all types of investos... Retail, QIBs and HNIs. Retail investors are a bit ok because only 17 (max) were allotted to them. The utmost lesson from this... Think twice before making an investment even in an IPO. Go for companies with a good revenue book, not a company only with good speculation of revenue.
Reliance Power came for subscription when Indian markets are at their peak. Every normal Indian who do not venture into stocks was thinking of that they didnt utilise the opportunities of Indian stock market boom. Then came the Reliance Power, the mother of all Indian IPOs so far. The strange thing was that every analyst is bullish of this IPO, though the company did not have any revenue so far. Even the pessimisic analysts were saying that one can invest even though fundamentals are weak.
The greed to gain money in a short span of time makes the retail investors to subscribe for Reliance Power IPO. It was heard that some 2 lakh DeMat applications were pending with NSDL in those 2 weeks. Many HNIs were hedging their money for the IPO.
But came the crash which mada almost everyone poorer than ever. Suddenly all the IPOs seems to be bad. Even 3 IPOs were withdrawn last week. Reliance ower made its debut with a huge loss to all types of investos... Retail, QIBs and HNIs. Retail investors are a bit ok because only 17 (max) were allotted to them. The utmost lesson from this... Think twice before making an investment even in an IPO. Go for companies with a good revenue book, not a company only with good speculation of revenue.
Panic Selling & the Retail Investors... No end in sight!!!
As I told in the last article, it is the retail investors who are going to be affected the most in a panic selling and a market crash. It became true the next 2 days itself after my article. I am not saying that I am always cent percent in the predictions and analysis. It is really a shock across the world particularly for the optimists of the street.
Markets across the world and particularly Indian bourses have come off the lows of Jan 22 - 23, but still clearly pessimism rules the world now. It is clearly evident from the fact that market has not seen a consistent rally, but swinging between the lows and highs daily. Pessimist analysts are very confident that the worst is not yet over. They might also be true as the recent trends are supporting them.
Indian market supposedly is believed to be in an upside movement atleast till Budget'08. The trend after that clearly is not known even to the king makers and badshahs of the street. The most affected lot in the current turmoil - retail investors, some of those supposedly lose over 5 lakhs in those 2 days are very well expceting a good run to cover up the losses. But it is imminent that they need to wait for some more years, yes years, to cover up those losses in those 2 days.
Adding to the Indian secondary markets' woes is the uncertainty in the primary markets. Last week has seen the withdrawal of 2 major IPOs, Emaar MGF and Wockhardt Hospitals, even after the reduction in price band and the extension period of the issue. This adds to the uncertainty in the minds of those who already are very much upset.
Are we really going towards a recession. With respect to Indian economy, the answer may be a clear no for the near term. But some of the recent estimates show that the Indian GDP is slowing down though not to worrying levels. It is evident from the past that a recession in US will have impact on India after some weeks. The gap might well have reduced now, but not the impact. Sub prime and credit crunch in the US will show see their real face during April-May and well India may also follow the path and we would well be in our 2 - 3 year lows during that time.
As most of the experts say, this recession wont extend beyond a period of at the most nine months, the worrying fact is to find out its starting point and its peak.
Already some of the Indian hotspot cities including Bangalore are said to be stagnant and dull in property prices. Also Q3 numbers of some of the believed-to-be-good companies have shown a slowdown in earnings.
All together, consensus are strong for hard times ahead to crack, particularly for already butchered retail investors. Yes... they have to fish in a bumpy market atleast for the next 2 quarters.
Markets across the world and particularly Indian bourses have come off the lows of Jan 22 - 23, but still clearly pessimism rules the world now. It is clearly evident from the fact that market has not seen a consistent rally, but swinging between the lows and highs daily. Pessimist analysts are very confident that the worst is not yet over. They might also be true as the recent trends are supporting them.
Indian market supposedly is believed to be in an upside movement atleast till Budget'08. The trend after that clearly is not known even to the king makers and badshahs of the street. The most affected lot in the current turmoil - retail investors, some of those supposedly lose over 5 lakhs in those 2 days are very well expceting a good run to cover up the losses. But it is imminent that they need to wait for some more years, yes years, to cover up those losses in those 2 days.
Adding to the Indian secondary markets' woes is the uncertainty in the primary markets. Last week has seen the withdrawal of 2 major IPOs, Emaar MGF and Wockhardt Hospitals, even after the reduction in price band and the extension period of the issue. This adds to the uncertainty in the minds of those who already are very much upset.
Are we really going towards a recession. With respect to Indian economy, the answer may be a clear no for the near term. But some of the recent estimates show that the Indian GDP is slowing down though not to worrying levels. It is evident from the past that a recession in US will have impact on India after some weeks. The gap might well have reduced now, but not the impact. Sub prime and credit crunch in the US will show see their real face during April-May and well India may also follow the path and we would well be in our 2 - 3 year lows during that time.
As most of the experts say, this recession wont extend beyond a period of at the most nine months, the worrying fact is to find out its starting point and its peak.
Already some of the Indian hotspot cities including Bangalore are said to be stagnant and dull in property prices. Also Q3 numbers of some of the believed-to-be-good companies have shown a slowdown in earnings.
All together, consensus are strong for hard times ahead to crack, particularly for already butchered retail investors. Yes... they have to fish in a bumpy market atleast for the next 2 quarters.
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