The recent stock market depression
The Stock markets all over the world has recently undergone a depression from the beginning of the year 08. The reason for this is obvious. The first reason for this is the recent US slowdown due to sub-prime lending which has given a big blow, as most of the Foreign Institutional Investment (FII) comes from US and secondly the US elections. Indian stock market has also been the victim of this US slowdown and so price of some of the momentum stocks like Indiabulls Financials, Indiabulls Securities and Videocon Industries has come down by over 90%. Now the major question that has arisen among the investors is that – Will this slowdown in the world market continue for the years to come?
The answer to this question is an obvious no. Firstly, the Federal Government has already taken steps to recover the US economy form depression and if this becomes effective, the US economy will start recovering from March or April 09 and the Indian Economy will again see rising stock prices. Moreover, the technical of Indian market are very strong and so the Indian market is a preferred market to invest for most of the FIIs. Secondly, after the US and the Indian elections, the investors will find stability in the market and so they will start investing. So I think one can expect an overall momentum in the stock market from the second half of 2009.
As per Economics, if there is a boom, there shall always be a depression and this depression in the world market is no exception to it. So I think that it is the right time to invest as the Indian stock market near the bottom line. Some of the shares which according to me can give very good return in future include Indiabulls Securities, Indiabulls Financials, Videocon Industries, Century Textiles, IDFC and Jaiprakash Hydro.
October 24th, 2008 at 7:51 am
[...] The recent stock market depression The recent stock market depression [...]
October 24th, 2008 at 10:18 pm
Will there be an Economic Recession, Depression, or Stock Market Crash in 2008 – 2010? How will the World Economy do? These questions are on minds of each and every individual today. In the light of recent financial market breakdown, the focus has been on the demise of powerful American financial institutions, such as Lehman Brothers and AIG. In 2008-2010 I think the U.S. stock market and economy will drop some, but the U.S. will do much better than the rest of the world. I think the U.S. will see economic instability in 2008-2010, but I think much of the rest of the world will see economic recession and stock market chaos 2008-2010. I personally feel that We’re reached a tipping point where anxiety about the economy is pervasive.
Good work all in all. Keep up the good posts coming.
October 26th, 2008 at 10:05 pm
Foreign Institutional Investors (FIIs) were not behind the recent fall in stock markets and there was no proposal to either ask them to withdraw from Indian market or ban them, Finance Minister P Chidambaram said. “Foreign Institutional Investors (FIIs) trading in stock market are the reason behind volatility (in stock markets) on certain days.” The ups and downs in the stock markets depend on the changing perceptions of investors — domestic and overseas, retail and institutional — about the economy, the sector and the company. “The recent fall in the stock markets is attributed among other factors, to the sub-prime mortgage crisis in the US, change in the monetary stance of developed countries, the expected recession in US (and) firming up of oil prices.” There is, however, no “proposal to ask Foreign Institutional Investors (FIIs) to withdraw or ban Foreign Institutional Investors (FIIs).”
While the benchmark Sensex fell 7.4% on 21 January, it rose 34.5% during this fiscal on a point-to-point basis from end of March 2007 to end of February 2008. Finance Minister P Chidambaram said systems and practices have been put in place to promote a safe, transparent and efficient stock market and to protect market integrity. The systems instituted include advanced risk management mechanisms comprising on-line monitoring and surveillance, various limits on positions, margin requirements and circuit filters. “The systems and practices are reviewed continuously and modified to meet emerging needs,” he said.
Measures taken to broaden and deepen markets include screen based trading system, dematerialization of securities, corporatization and demutualization of exchanges, settlement through clearing corporation and trading in of derivatives. Many investors are thinking that they have almost faced the shocks of current crisis. Frankly to tell, Indian economy has still not faced even 25% of crisis effect. We will feel the “real shocks” in the next 2-3 months as it is slowly spreading to India. It will be a surprise if Indian main economy escapes from this global crisis. But stock markets already discounted 70% of credit crisis effects on our businesses. That’s the only hope for stock market investors.
“What’s the 26-year low for BSE Sensex?” Japan’s “Nikkei” touched 1982 levels during intraday trading on this Monday. Markets expect fresh steps by global authorities this week to try to stabilize shaky markets.
The US Federal Reserve is expected to cut interest rates Wednesday from the current level of 1.5 per cent. Investors are also waiting for Thursday’s US gross domestic product figures for the third quarter, which are expected to show a contraction. A slew of economic indicators and corporate results are also due this week in the United States, Europe and Japan, which analysts said are unlikely to give much cause for optimism. “If the fall in markets has its origins in the fear of an international recession, then the coming week will be very bad,” said Carl Weinberg at High Frequency Economics in New York.
“The economic calendar is full of indicators that will be uniformly atrocious.”