In a major development going on in the USA,the fifth largest  Investment bank Bear Sterns is on sell for a mere $2 per share, or $232.6 million. and the company is being bought by another major investment bank called JPMorgan.

This stunning last minute decision is being taken by the board of Bear Stearns to avoid bankruptcy sparked by the subprime crisis in the markets.Just on Friday the company’s share prices fell by over 45.9% fearing a big problem about to be unleashed.

Reacting to this piece of news from the US markets had fallen sharply at this point of time.At 9 AM IST Nikkei 225 is down by 514 points or 4.20% from its previous close.Hang Seng down about 1061 points or 4.8% and Straits Times is down by 68 points or 2.41%.On Friday too ,Dow Jones fell by over 195 points.

Meanwhile the Fed has announced a rate cut of 25 basis points from 3.5% previously to 3.25 % now.The Fed had said that this move has been taken to bolster market liquidity and promote a smooth market functioning.There is also a news that Fed may cut rates again on Tuesday.

Now what does all this news mean to the Indian markets.They are about to start trading in another 40 minutes from now.And I expect the markets to react in the same fashion as the Asian markets.Whenever the Asian markets fall the jitters are seen in the Indian markets too.Investors are advised to be away from Banking and Financial stocks.ICICI and SBI had fallen a lot in the last week or so.They may take a big hit even today.The market sentiments are severely down at this point of time.A word from the finance minister must be coming in today for sure to prevent a steep fall in the sensex and nifty.Fingers are crossed now.Lets wait and watch how the Indian markets unfold.

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