Friday, May 19, 2006

Day 2 of the Great Indian Market Collapse

Right now, Yahoo! Finance India - definately one of the best financial websites there is (no fancy Java, just numbers, and loads very fast) tells me that the BSE Sensex has collapsed over 300 points. Most of that happened since one in the afternoon. On Wednesday evening the BSE Sensex stood at 12,217.81, yesterday it collapsed 826.38 points and stood at 11,319.43. Today, the market fell below 11,000, and has dropped almost 10% of its value in two days flat. That said, there has been rather hectic buying activity in the last fifteen minutes pushing the market above 11,000 again - maybe some people are trying to enter the market at 'slightly' more rational valuations - yet when companies trade at 20 times projected 2007 earnings (in sectors where I might be a bit sceptical about) still, I don't see how people are being 'rational'.
I have to rush out to attend the earnings conferences of Tata Motors and Bajaj Auto in a bit - both cleverly being done after the market closes, but I really don't think the market gives a rats ass. Chidambaram's minions policy to tax everything dry is backfiring on them spectacularly. And I don't think anybody will care about reservations or no reservations by tomorrow, or if Malini Ramani can go abroad or not. And surprisingly enough, given that India's 'best editors' know next to nothing about the market or even how corporates work, the media will be absolutely clueless about this.
Other than one channel maybe (given the lack of knowledge of basic stuff in their 'rival' there is only one channel to watch really), but since one person on that channel must have made a massive paper loss, I'm sure the mood there won't be good.
Oh, and at 1458hrs, the Sensex is stands at 10,985.15 down 406.28 points or 3.57%. Gotta rush!

5 comments:

Shashikant said...

K,

* FIIs have been selling for quite a while. I would say, there is very little truth in the argument that they are selling due to tax announcement. (Self-promotion: Visit my blog.)

* The last minute upward movement can be attributed to (well... only my speculation..) buying by LIC, UTI (whom Govt dictates to buy in such situations) and covering of short positions by traders.

* If the bull run gives a damn to corporate earnings, even bear slaughter does the same.

* Now, the real drama will unfold when all the analysts and MF CEOs talk as if they knew it all along this was going to happen.

thalassa_mikra said...

I guess it's not an endless downward spiral and merely a much needed correction after which we can all go back to normalcy. We've come a long way from our Harshad Mehta days (I hope).

And in situations of bullish buying as well as panic selling, earnings ratios become redundant to an extent.

Bonatellis said...

shashikant: i think everyone who understands knew a big correction was about to happen ... it's just that no one knew when and what would be the quantum ...

this is just a temporary correction, to enable the big investors to book profits. if you have noticed, over the last few days most of the big daddies (FIIs) have been announcing from Singapore/HK that the market is stretched/overheated/overvalued ... and while everyone said they're waiting to invest, they said they thought valuations were too high ...

so all these guys, you'd see, will now put in big money ... quite a few govt funds from Korea, Japan, middle East etc are waiting to get in ... and the MFs are sitting on cash of over Rs 9,000 cr ... how can this market remain depressed ...

record earnings, strong liquidity, strong macro fundamentals, lower valuations now, how can this market remain depressed??

look at the demographic shift that is happening ... over the next 5 years, over 200 million will cross the age of 18 ... think what that will do to the liquor industry, for eg ... so, do you understand now why Vijay Mallya is playing less importance to his girls and more on his business these days?

Anonymous said...

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Anonymous said...

the word is definitely. even for those from delhi.