Wall Street And Major Global Markets Crash, India Markets Reacts Badly.Aug IIP Slumps To 1.3%.

12 Oct

Posted by Shyam as Market News

Friday was a day and the last week in general will not be forgotten so easily by the traders and investors who deal with the share markets. It was like all the barriers were broken and all support levels breached. It all started with Dow slumping close to 600-700 points on Thursday(IST). And when the Asian markets woke up it was hell on loose.

Starting with the Asian markets which open early in the morning(IST), like Nikei-225 from Japan crashed by 10% to settle at 8,276 levels. Shanghai Se Composite index opf Chaina fell by 4%,Kospi tumbled down by 4%, Straits Times from Singapore plunged over 7% to close at 1943 levels and Han Seng plummets 7% to close at 14,797 levels. Dow Jones even managed to go below the psychological 8000 levels for the first time in 5 years.

The Indian markets which opens at about 09.55 hours (IST) had enough reasons to open huge gap down with world markets and the peer Asian already down by 6-8% each. And sensex opened with a bang, 800 points down and Nifty opened 270 points gap down. It was literally blood bath on the streets. Then came the Infosys results and a weak revenue guidance for the Q3,2009.

Finance minister had to come down to give assurance to the markets and share markets recovered partially.RBI came to the rescue of the markets by lowering the CRR by 150 basis points to 7.5% and already last week it was lowered by 50 basis points to solve liquidity problem in the system.But bad news were to follow soon. The Index Of Industrial Production (IIP) figures for the month of August came as one more shock for the markets. The IIP figures for the month of August stood at a mere 1.3% as against 10.9% in the corresponding period last year.

Reacting to this many analyst said that we are in a industrial recession as well and the markets reacted even more badly and at one time fell by more than 1000 points to touch 10,270 levels. I feel the next support levels for the sensex now stands at 9700 levels and then at 8500 levels. But in these market conditions anything can happen on a given day. Majority of the stocks like ICICI(down by 26% intra day), JP Associates(down 12%), RCom (down 10.3%) and the realty sector was also badly beaten.

If you are a long term investor for a period of 4-5 years then you can start accumulating a few Heavy weights at these dirt valuations now. 14,000 is a level where you can look at exiting or booking profits partially. I still feel we are yet to see the bottom of the markets now. And it will take some time for the markets to settle down and especially the financial turmoil to cool. People are now investing in gold for hedging the stock markets and it has almost touched all time high of 14,200 levels and we expect it to go to 15,000 levels in the coming Diwali Season.

The Indian currency also touched news heights against the dollar and is now trading at 48.72 levels against the dollar. Finally the markets managed to close 800 points down in sensex at 10,528 levels down by 7.07% and nifty fell 234 points to settle at 3280 levels. 3100 is a crucial support for nifty now and then 2,850 levels to 2900 levels.From the highs of 21000 levels in sensex and 6000 levels in nifty we have lost about 50% of the valuations already in the 9-10 months from the beginning of the year.

Meanwhile Britain has launched a massive $60.5 billion banking rescue and the Indian Govt is also mulling over such a decision soon reacting to the world markets. Over the week sensex lost close to 2000 points or 15.5%, and Nifty lost 14% from its previous close. Realty was the worst hit down by 25%,IT,Bankex and Power down by 17% eachJapan is also passing through one of the worst times since 1987 crash. Also it was the worst performing week in the Dalal Street since Dec 1990. Still be ready to face some more tough times ahead and keep a look at the valuations of the good stocks and start accumulating for long term.