Just for records, the third quarter results – which have been normal – have not been the cause either
On January 22, almost a full one and a half
days after the crash, Finance Minister Palaniaapan Chidambaram commented, “We had anticipated that markets will open today on a downward note and may hit the circuit breaker. I am assured by RBI and all the banks that enough liquidity will be provided to brokers and market players.” His belated ‘forecast’ statement clearly bordered on the jocular. Could it have been made earlier? The answer is a no-brainer, yes! But to his credit, government institutions did step in on the subsequent days to massively increase their purchases; and despite continued FII selling pressure, the markets actually recovered to reach the 17,000 plus levels on January 24, 2008. Few allege the lack of transparency in financing margin money, overvaluation of IPOs, over speculation and faulty settlement mechanism for the mayhem.
But some analysts have commented that the Q3 results could have played a truant in the market movement. While the first two sections of this cover story have already dissected the real culprits (if one could call them that) behind the thrashing that the Sensex took, when B&E spanned through a plethora of Q3 results of various corporate houses and firms across sectors, it was quite clear that Q3 results could never have been the reason, or the supporter, or a player of any significance in this crash.
Economically, as even the Finance Ministry accepts, India “is very different from some developed economies, which are facing some stress.” Ergo, one cannot even draw up a flat correlation between global and Indian market movements. But surely, now a positive point for the bourses is the news that insurance companies have a huge corpus of $15-20 billion to invest in the stock market over the next two years (a figure that would surpass even FII investment), while mutual funds are expected to add another $6-8 billion in the same time period. At the same time, as per the projections of the Economic Advisory Committee, the foreign institutional investments in capital markets will slow down to $5.5 billion in the last quarter this fiscal. So will the stock markets now continue to rise? If you’re sure about the answer, call us...
On January 22, almost a full one and a half
days after the crash, Finance Minister Palaniaapan Chidambaram commented, “We had anticipated that markets will open today on a downward note and may hit the circuit breaker. I am assured by RBI and all the banks that enough liquidity will be provided to brokers and market players.” His belated ‘forecast’ statement clearly bordered on the jocular. Could it have been made earlier? The answer is a no-brainer, yes! But to his credit, government institutions did step in on the subsequent days to massively increase their purchases; and despite continued FII selling pressure, the markets actually recovered to reach the 17,000 plus levels on January 24, 2008. Few allege the lack of transparency in financing margin money, overvaluation of IPOs, over speculation and faulty settlement mechanism for the mayhem.But some analysts have commented that the Q3 results could have played a truant in the market movement. While the first two sections of this cover story have already dissected the real culprits (if one could call them that) behind the thrashing that the Sensex took, when B&E spanned through a plethora of Q3 results of various corporate houses and firms across sectors, it was quite clear that Q3 results could never have been the reason, or the supporter, or a player of any significance in this crash.
Economically, as even the Finance Ministry accepts, India “is very different from some developed economies, which are facing some stress.” Ergo, one cannot even draw up a flat correlation between global and Indian market movements. But surely, now a positive point for the bourses is the news that insurance companies have a huge corpus of $15-20 billion to invest in the stock market over the next two years (a figure that would surpass even FII investment), while mutual funds are expected to add another $6-8 billion in the same time period. At the same time, as per the projections of the Economic Advisory Committee, the foreign institutional investments in capital markets will slow down to $5.5 billion in the last quarter this fiscal. So will the stock markets now continue to rise? If you’re sure about the answer, call us...
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