Satyam computer services, India’s 4th largest software exporter has been in news for all the wrong reasons since the last fortnight. The failed Maytas infrastructure deal has taken its final toll today. In a major development, the Chairman and Managing Director of the company B Ramalinga Raju has resigned from his post today at around 11 AM. He has admitted to major financial wrong doings.

It was a big blow to the entire IT community when the news came in. Satyam board meeting was scheduled to be on Jan 10th 2009, when some action was to be taken. But it all happened days before that. He has admitted frauds of Rs 7,000 crores. Reacting to this major blow, Satyam share prices plunged down by 77% intraday to close at Rs 41 levels. Earlier in the day the stock prices almost kissed Rs 30 levels when the sentiments were badly hit. In the wake of this corporate tragedy (possibly the biggest one), Sensex has undergone a tailspin of about 749 points or 7.25% today to close at 9587 levels. Nifty also crashed by 6.6% today to close at 2920 levels, down by 192 points. We will follow up with this major development in the coming hours.

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After the announcement of the second stimulus package on Friday last, markets are expected to open gap today. The Asian markets have also opened higher today morning. Nikkei-225 is trading up 2% ,Hang Seng and Straits times are also up by 1% and 1.68% respectively currently. But some how it looks difficult that markets will sustain at higher levels so much. After a small rally markets may even come down. Profit booking will take place at higher levels.

The stimulus package which was announced was more or less expected by marketmen. Sectors like auto,banks, real estate and cements are likely to open higher today. But you need to check how long can they survive at those levels.Some of the intraday calls for today include :

Buy India Infoline  above 69, Stop Loss: 67,Target: 74,76.

Buy IDFC above 72, Stop Loss: 69,Target : 76,77

Buy Punj Lloyd above 159,Stop Loss: 157,Target : 162, 165

Buy DLF above 301, Stop Loss : 298, Target: 309,311.

Check them out with strict stop loss figures. You can even short sell some of them at higher levels to get some more profits again with strict stop loss in mind. 10,000 on sensex and 3000 on nifty are major hurdles at the moment, so remain cautious. Once these levels are crossed and markets sustain above them then we can expect some more rally till 3080 or 3120 in nifty.

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The panic stricken govt has announced the second economic booster package to revive the falling economy. It was a sort of mini budget minus all the tax implications. The Govt recognized that the first economic stimulus package announced was not just enough, the Govt has unveiled the second one just 2 days back. The measures taken are summarized below:

1. The govt along with RBI has slashed the 3 key policy rates. RBI has cut CRR or cash
reserve ratio ( the percentage of total deposit a bank has to park with RBI) by 50 basis
points to 5%. The cut in CRR would infuse Rs 20,000 crores into the system. The RBI has already freed some 3 lakh crores by these measures in the last 2 months.

2. RBI has decided to reduce the repo rate (the rate at which banks can borrow from RBI) by 100 basis points to 5.5% which is eight and half years low. The impact of this is that the banks may again go for loan and deposit rate cuts just because it can now borrow money from RBI at cheaper rates. So getting loans will become easier in coming days. Indirectly more and more liquidity is infused into the system to solve the credit crisis present in the system.

3. RBI will cut reverse repo rate ( the interest rate banks get when they park money with
RBI) by 100 basis points to 4%. So now the banks will be forced to lend money to continue the business as RBI pays less and less interest after this measure. So again it will infuse some liquidity into the system.

Meanwhile Montek Singh has said “No single set of measures can insulate economy from global downturn”. RBI has cut the key rates barely a month back on Dec 8th. But somehow this package also seems not to be very enough because the RBI is just releasing the liquidity which it sucked from the markets previously. Just because the inflation has come down to below 7% levels in the last few weeks, RBI can freely take rate cut decisions. The results season will kick start very soon now and then we can see how the Indian companies have fared in the Q3 of 2009 fiscal year. There is a cautious optimism in the air all the time. So what do you think? Will this so called economic booster be enough to revive the economy and pull us back from the global crisis?

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I wish all the regular readers and visitors of livesharemarkets.com a very happy and prosperous new year. We hope 2009 would be a better off year than the year which passed by.

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May be the year 2008 was one which people would like to forget off as soon as possible. The Indian share markets almost peaked to 21,000 levels and then started the downfall. The much awaited US recession started to show its adverse impacts right from the very first month of the year. Since Jan 2009 has been falling like a pack of cards and ended the year with almost a loss of 54% over the year in sensex. 48 out of the 50 nifty stocks posted negative returns. over the year. Unlike the last year(2007) when FIIs brought about $17 billion to the Indian markets which pushed it up to show a whopping 47%  in  returns, this year the same FIIs pulled out nearly $13 billion from the Indian markets.

The USA financial system deepened into a severe crisis after huge investment banking companies like Lehman Brother, Meriyll Lynch etc crashed and went bankrupt. Finally USA had to agree that its economy was in a recession and that too since Dec 2007. Strange that it took them almost 12 months to accept the hard fact. All the Asian stock markets were also on a downward roll. Nekkei-225 fell by 42% in this year, Hang Seng was down by 48%, Chinese Composite Index was down by 65% and Russia was the leading one with a fall of 72% this year.

 

The worst came in the Indian markets on Oct 27^th 2008 when it touched a 3 years low of 7697 levels from 21,206 levels achieved on Jan 10,2009. FIIs were pulling money badly from the markets and the exposure of ICICI to some of the oversea drafts pulled its stocks down to 28% in intra day on one fine day in October.  The worst hit area was realty pack with all companies from DLF to Unitech posted huge losses this year. Many IPOs were also called off including one from Emaar MGF Land Ltd which came with a 7000 crore offer. The only and partially successful IPO was from Reliance Power.

The year saw a dramatic rise and then a huge fall in crude oil prices. At one point when crude oil peaked $147/barrel analysts were expecting it to touch $200/barrel. But since then it has taken a big dip due to demand slowdown and touched $35-36 levels per barrel. Indian Rupee against Dollar also played a lot of hide and seek. Dollar was once quoted at sub Rs 38 at one point and then touched almost 51 levels. Infact Rupee fell 19% this year making it the biggest loss since 90’s.But amidst all these factors Indian economy somehow avoided the biggest global crisis ever in the world. Even though the effects of the slowdown in USA and world over is very clearly reflecting in India’s growth story, but still then the GDP is expected to grow at about 5-5.5% this year.

Thanks to some of the decision taken by RBI and Mr.Y.V.Reddy sometime back, that we are atleast in a comfortable position today. From here the impacts of slowdown will further come into picture. Some even expect the Indian share markets to touch Oct lows again with a fall of 20-25% from here. Only time will tell the story better.  On the last trading day of the year Sensex lost 68 points to close at 9647 levels and nifty lost 20 points to close at 2959 levels. ICICI has also cut its home loan rates by 0.5% today.It is applicable for both current and existing customers. With a positive hope that the economy and the Indian markets will recover to some extent in the next year, lets bid adieu 2008 !

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