The rise and fall of Bombay Sensex the popular indicator of stock market sentiments has always been a headline making incident over it’s 20 year life span . The Sensex which is weighted average (based on market capitalization) of 30 leading scrips against base year 1979 has witnessed unanticipated crash or boom on several occasions .
The rise of sensex is linked to strengthening of the Indian economy and fall in sensex is linked to temporary setbacks and corrections over the past two decades. Starting it’s journey from 1986 the sensex touched the four figure mark in July 1990 and later fuelled by the liberal economic policies of the then Finance Minister Manmohn Singh it zoomed past the 4000 mark in 1992 . Arrival of Harshad Mehta on the scene and the subsequent devastation and mayhem in the Stock exchange kept the markets subdued for the next several years . Sensex could touch the 5000 mark only in 1999 . Journey from 6000 to 7000 mark again took 5 years but thereafter there was no looking back. The sensex gained 10000 points in next 30 months touching 18000 in Oct .2007.
The continuous boom in stock market in last five years has lead to growth of prices above 25 % per annum. A market watcher has rightly commented that the Sensex during the period has not grown but jumped . Economy has benefited by the decontrolling influence as well as opening of markets to foreign investors and is fast becoming globalised in true sense of the term. Indian companies have frequently been in news for competitive buying of professionally manged companies abroad. The worth of India in stock market today is in proximity to $1.5 trillion. Over the years the dominant scrips influencing the market have also changed . The market which was dominated by commodity scrips , now also has a variety of scrips related to infrastructure sector , IT and Telecom with dominant influence. This reflects the chnge in focal activities of the economy.
The rise of sensex has also been punctuated with several market crashes which have sent the investors running for cover. On ten occasions fall of more than 600 points has occurred in a day.
In recent memory while the sensex was climbing record heights it received a jolt in the participatory note crisis in Oct. 2007. The crisis was in follow up to restrictions announced by the Finance Ministry on investments through Participatory Notes. Over period of one hour the sensex declined by 1744 points on 17th Oct.2007 . The crisis was however promptly tackled by the clarifications given by the Ministry and the sensex bounced back. The 20000 mark was soon crossed over.
Jan.2008 was another memorable month for investors . Against a highly volatile market, investors panicked following apprehensions of US economy plunging into a recession and consequent weakening of global markets. On 21st and 22nd of that month, the sensex declined by 2283 points . Jan 22nd saw the biggest intra day fall of 2273 points. The decline was checked and Trading assumed an upward trend after US Federal Reserve effected a cut in interest rate by 75 basis points . The US authorities move in fact affected the stock markets in other Asian markets too in a positive way .
The crisis repeated the lessons of previous such crashes The message was for small investors ,to stay watchful in an overheated market.
Cursing the Darkness 
World economy is going to wards the recession. But is it true for all countries? May not be as industrial and technology is in recession we can not say that farming and dairy industry is in recession. and if you have a land , water and natural resources for farming and dairy. business is ever green as it was.
That’s the best side of nature, agriculture independence from all. present Business and financial turmoil is spiralling all over the world. and this ‘MANDI’ is damaging all over but the soul (‘TOTA’- Parrot of this ‘MANDASUR’ – financial crisis is not here) is located in western world. eg USA and Europe.
To control this crisis NEED TO kill this parrot of ‘MANDASUR’ but we can not do that there IMF, G7 and all those government are acting for it. But by that time that will make all damages all over the world including all of us.
Our government is now realised the fact and cut CRR interest rate first by 1/2 % and then by another 1%. But that was the ‘SHEKH CHALLI’s’ example of DELHI to DOLTABAD and again DOLATABADto back to DELHI.
during time of increase of the Inflation to control the INFLATION they increased 1/2 % interest rate in CRR. That was the wrong step as that gave boost to INFLATION to Highest point at that time. and now 1/1 and 1 % reduction of CRR may not give that desired effect as still inflation is BITING us.
Richer countries of Europe and USA have their Outsourcing centres and employment in our economically developing countries. But as those government and companies are going to be in recession that may affect us as well. As those businesses are dependent and non productive, These Economic crisis may bite those companies may switch off these employment and there will not be use of those developments. instead if it was a productive business lime manufacturing industry ot agriculture we may carry on with this production.
But any how now DIWALI festival is approaching soon and we wish every one a ‘VERY HAPPY DIWALI and a VERY PROSPAROUS NEW YEAR’ but how good? god wishes. We will spend plenty for our DIWLI festival and see what happens after that to this financial crisis.
As these crises are not going away in a short time. though it may diminish for some time but we need longer period to recover. say at least couple of years or even longer than that to rebuild the correct economy.
Crisis of Banking, HOUSING and insurance will last Longer and as it will be spiralling each other as well as many others. and engulfing many of them. and that also reach far beyond and all over the world. and that will last longer than expected. as employments and personal finances will be affected. Over and above that SOON the Christmas and new year of 2009 is coming for further expense for them. Plastic money borrowing will Damage further to nail this coffin. So that will last till rest of the next year.
Housing negative equity will crease people and loosing of homes , business and personal life will also increase crime rate, like fraud, theft, criminal damages, robbery, etc.
so keep fingers crossed next few years looks grim but we need to keep an eye to the developments and recovery of this situation. damage is done quick but rebuilding will take years so coming back to Normal as we were in 2007 will take decade to reach there. and recovery by any means of artificial inflation will be as bad as today’s damage.
UPDATEs in ECONOMIC ANALYSIS:- If previous Analysis has been Ignored please do not Ignore again the second analysis. FM took action but the market still goes below this level. AND further action will be needed.
Subject: Market Analysis By our ECONOMIST with Candlestick ANALYSIS.
Previous report Date: Wed, 8 Oct 2008 09:26:03 +0000
Market Analysis with Candlestick ANALYSIS By our Economists. (NEW CHARTS will be ready soon after next close DATA of the markets
We have advised most of economists and economic times about prospects of the markets in recent market turbulence and economic crisis. We also wrote them regularly and LAST WEEK as well, with yesterdays reminder saying that market is well beyond expectations.
Previous report :- SENSEX will not only drop below 11 thousands BUT expects to go below 10000 again. And if steps not taken to prevent the uncertainty may collapse to unexpected level below the margin of beginning of the 21century.
Update in ECONOMIC ANALYSIS:- If further preventive action not taken by FM to support by any bailout action or cutting interest rate, before any further crash to its critical point level. Sensx may drop below 9000.
many BANKs are in line to go BANKRUPT. Even world famous BANK of BARCLAYS has dropped near £2.07 and likely to slip below £2 near to 1.27. so what we expect from othere banks like ICICI and others.
Previous report :- Similarly DOW JONES will drive whole world economy to the recession. Even Great Briton is in Official recession. If Dow Jones will slip beyond the 8000 mark again, and necessary steps are not taken to support it, That may drive below 7000 mark
Update in ECONOMIC ANALYSIS:- Media is exposing the market to increase the volatility of selling the market stocks. media should support not to panic or advise to stop selling . if panic of selling goes on the USA Dow Jones next may drop to 7000.