The insanity gets a break
For the first time since the U.S Fed started cutting interest rates in September2007,
the Indian stock market stopped its manic and insane bull run for this week after galloping from 15500 to 21200. It simply disregarded the global events like the write down of billions of dollars and all the big banks of the world's largest economy running for cover to shore up capital and their balance sheets. And adding to the mania was the theory of Growing indian economy, pouring money into Indian markets and new found theory of demerging several divisions of a company to take advantage of the insanity.
Just look at the following absurds.
1.Reliance Energy seperates Reliance Power and while Anil ambani acquires shares in Reliance power at Rs.17/- per share, issues it to the public at 450 and that in turn expects to get listed at 800-900. And the project will take 6 years to equal the capacities of NTPC or Tata Power which are trading at significant discounts. It is not anything but insanity?
2. The High court of a state government just recommends a lower price to be paid by the sugar companies for the procurement of sugar cane and immediately all the sugar shares(even the ones which are not in that state) jump 10-15-20% as if all is rosy from then on. The forgotten facts are that they are all already bleeding with losses last 2 quarters, the crushing for the current season got delayed by 30-35 days and the sugar prices in the international market is still near its 1 year low.
3. The so called oil marketing Navrathnas loose crs of money everyday and the annual loss is estimated to be around Rs.70,000/- crs due to under recovery and subsidies but the government does not allow them to raise prices even though it has OFFICIALLY
dismantled the APM - Administered Price Mechanism way back in 2002.
4. The U.S dollor continues to plunge across all major currencies and most of the I.T majors accepting that further strengthening of rupee will surely affect the margins. Thats is why when the sensex is just 10% off its all time highs as of yesterday(18th Jan 2008) most of the I.T heavyweights like Infosys,NIIT Tech,Patni Computers,Satyam and Tech Mahindra hit their 52 week lows.
5. Now if the real estate boom was predominently aiming at these IT bigboys for commercial purposes and their young,aspiring and well paid engineers for residential purposes, how will that sustain when the industry is reeling under margin pressure and slowdown.
The negatives goes on and on but the stock market is disregarding all these and on the contrary went from strength to strength(or shall we say speculation to over speculation)only to create a bubble that finally went bust this week.
While many may think that this sharp fall is an opportunity to buy, I see a further fall of atleast 1000 points in sensex to 18000 levels and in case of worsening situations in U.S like bankruptcy, a possibility of 16500-17000. So get back your sanity and invest for long term.
the Indian stock market stopped its manic and insane bull run for this week after galloping from 15500 to 21200. It simply disregarded the global events like the write down of billions of dollars and all the big banks of the world's largest economy running for cover to shore up capital and their balance sheets. And adding to the mania was the theory of Growing indian economy, pouring money into Indian markets and new found theory of demerging several divisions of a company to take advantage of the insanity.
Just look at the following absurds.
1.Reliance Energy seperates Reliance Power and while Anil ambani acquires shares in Reliance power at Rs.17/- per share, issues it to the public at 450 and that in turn expects to get listed at 800-900. And the project will take 6 years to equal the capacities of NTPC or Tata Power which are trading at significant discounts. It is not anything but insanity?
2. The High court of a state government just recommends a lower price to be paid by the sugar companies for the procurement of sugar cane and immediately all the sugar shares(even the ones which are not in that state) jump 10-15-20% as if all is rosy from then on. The forgotten facts are that they are all already bleeding with losses last 2 quarters, the crushing for the current season got delayed by 30-35 days and the sugar prices in the international market is still near its 1 year low.
3. The so called oil marketing Navrathnas loose crs of money everyday and the annual loss is estimated to be around Rs.70,000/- crs due to under recovery and subsidies but the government does not allow them to raise prices even though it has OFFICIALLY
dismantled the APM - Administered Price Mechanism way back in 2002.
4. The U.S dollor continues to plunge across all major currencies and most of the I.T majors accepting that further strengthening of rupee will surely affect the margins. Thats is why when the sensex is just 10% off its all time highs as of yesterday(18th Jan 2008) most of the I.T heavyweights like Infosys,NIIT Tech,Patni Computers,Satyam and Tech Mahindra hit their 52 week lows.
5. Now if the real estate boom was predominently aiming at these IT bigboys for commercial purposes and their young,aspiring and well paid engineers for residential purposes, how will that sustain when the industry is reeling under margin pressure and slowdown.
The negatives goes on and on but the stock market is disregarding all these and on the contrary went from strength to strength(or shall we say speculation to over speculation)only to create a bubble that finally went bust this week.
While many may think that this sharp fall is an opportunity to buy, I see a further fall of atleast 1000 points in sensex to 18000 levels and in case of worsening situations in U.S like bankruptcy, a possibility of 16500-17000. So get back your sanity and invest for long term.
Labels: stock market - indian and global
posted by manipayal @ 11:14 PM
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