DOESES OF OXYGEN FAILING???????

The expected sequence of events are unfolding in their own classic way.First the relentless easing of interest rates,easy liquidity,over leverage leading to heating up of asset prices and that leading to over optimism and greed.While it is understandable that an individual or an Institution takes reasonable risks in the money making exercise, it is indeed suprising and sometimes shocking that so called or perceived big and safe ones resort to excessive leverage or risks far beyond any permissible levels of imagination.It is more so shocking to see that such large institutions resort to the most common practice of individuals who are in the last stages of becoming bankrupt or insolvent known as "Teaming and Leading" - an exercise of borrowing from one and returning to another to keep floating.And also these large instituions resorted to borrowing for short term to meet the short term and in some case long term committments - a must no by any prudent money manager. So as the supply of short term money dried up these institution chock and suffer massive attacks like run on the bank and/or bankruptcy.It happened in the case of the bank"NORTHERN ROCK" in England last last year and it may well happen to"BEAR STEARNS" in U.S sooner or later.And I feel this "Bear Stearns" case is just the beginning of the bigger failures we may see in the U.S banking system which will have its logical contageon effect in world financial markets.
Coming back to our Indian Stock markets, With economy slowing down,corporate profits likely to shrink in the next few quarters and valuations still not cheap in any of the sectors that propelled the market to dizzy heights, the correction is far from over.Not many may remember that after the 2000-2001 ICE(Information,Communication & Entertainment)meltdown, even the topline shares like Infosys,Satyam and Wipro corrected 70 to 80% from their peak prices and the index corrected more than 50%While many may have stopped buying for the time being now, many will start selling from nowon only,first the liquid ones and then the others. With hardly 10 stocks hitting new highs(52week) and 300 stocks hitting new lows, we are clearly in for a prolonged bearish phase if people still dont want to call it as bear market yet.With these local and global factors,I will not be surprised to see Sensex around 12200 to 12500 and Nifty around 3700-3800.You may not be able to buy stocks at their lowest prices but certainly you can buy a lot of them at 20-30% lower than current prices. You may not be able to time the bottom but you can surely potpone your buying for the time being.Best of Luck!!!!