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.
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