Wednesday, October 29, 2008

Fed cut rates.

In order to create liquidity pool in the economy,and to curb credit crunch in the economy, today fed announces another rate cut by 0.5 percent, thus now the offering rate is 1.0%. The rate cut clearly shows the gloomy outlook of the economy, with federal reserve giving out warning sirens and stating that, economic revival make take some time.

The current rate cut matches with the lowest rate cut ever carried out by federal reserve, the last time federal decreased the rate to 1% was in 2003-2004, which clearly triggered the subprime lending and resulted in the one of the largest financial turmoil in decades.

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Tuesday, October 28, 2008

Sensex ended up on Mahurat Trading

In the grim market situations, when every stocks on the exchange are battering fo their suvival, with some of the stocks are trading way below their offering prices. But some how this Diwali, which also announces the Samvat 2065, bought a sigh of relief to investors. With on Mahurat trading, India BSE sensex, closes with a 5 percent gain, and somehow crosses the 9000 mark.

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Monday, October 27, 2008

Recession in US markets

With the markets throughout the world are moving downwards, and chief of all states are coming together and somehow with cold words stating that their economy is in recession. I was just googling around and found the list of some of the major recessions which had takne place in the recent past.

Recession definition : (
Source Bnet)

a stage of the business cycle in which the economic activty is in slow decline. Recessions usually follows a boom, and precedes a depression.It is characteriszed by rising unemployment and falling levels of output and investment.

Here find the list :

1. Post World War Recession [3 Years]

2. 1929 Great Depression [10 Years]

3. Recession of 1953 [1 Year]

4. Recession of 1957 [1 Year]

5. 1973 Oil Crisis [2 Years]

6. Early 1980'2 recession [2 years]

7.Early 1990's recession [1 Year]

8. Early 2000's recession [2 Years]


Sunday, October 26, 2008

Common people expression on Financial market

Markets throughout the world are rallying southwards, the financial turmoil which started with US housing downturn has now starting showing its effects every where in the world. Here find some of the comments from the common people, who are directly affected by this financial crisis.

Expressions like :

1. Sensex is down, its all time low.
2. I have lost 100,00$ in this financial crisis.
3. I think the whole world is in a problem.
4. World economy is tied to US economy, which make even thing harder for the other economy to survive this global turmoil.
5. Besides, the whole world has invested in the US market, they will in the same ride as US is.
6.Stock exchanges are all time low, all major banks in the US are plummeting like anything.
7. How can they lend money, to anybody without any supervision.
8. If subprime mortgage wouldn't happened in US, it would not have happened anywhere else in the world.
9.Next 6-8 months will be tough, will see more downgrades in the unemployment levels etc.
10.Its has to get better,its cannot get worse.

The expression clearly shows hoe badly the crisis are, and how bad it can be if its not rectified in coming months.


Wednesday, October 22, 2008

Who murdered the Financial System?

Today, as I was going through the pages of Indian English Daily Times of India, I came across an article, the heading of the article was "Who murdered the Financial System? The article discussed about the people responsible for the such a financial mayhem.

Here find the synopsis of the article.

According to TOI, everyone from makers to consumers to regulators were responsible , but they narrow down there list to 10 murderers of US financial system.

1. Federal Reserve Board : They were responsible for forming bubble economy, and did not notice it when the bubble was on the verge of a bust.

2. US Politicians : They envisioned a house for every American, regardless of their income, and formed unregulated govt. agencies Freddie Mac and Fannie Mae, which disbursed loans like anything.

3. Fannie Mae and Freddie Mac : They resisted regulation, and spent over 2million$ lobbying legislators against any tightening of rules.

4. Financial Innovators : Financial Engineers working at the Wall street, created new structured products backed by subprime mortgages and sold to investors.

5. Regulators : Everybody in the financial markets were sleeping and no body cared to check the worthiness of the CDO's.

6. Banks and mortgage lenders : Instead of keeping the mortgages at their own books, lenders packaged it into security and sold it to other financial players and increase their liquidity, which results in more lending and vice versa. Besides, banks were busy on giving loans to people without checking their financial capabilities, which added fuel to fire in the financial crisis.

7. Investment Banks : Once these financial institutions provided services like underwriting, M&A, IPOs etc. But recently they started borrowing money to trade into their accounts.

8. Rating Agency : They offered ratings which were inappropriate for some of the financial instruments available in the market.

9. Basel Rule for Banks :

10. US consumers : Some times ago, US households savings were 6% of the disposable income, but now its either zero or negative. They have gone on a borrowing spree to spend far more than they earn.

10. Asian and Opec Counties : They undervalued their currency to simulate exports to US markets. They accumulated billions of forex US dollar reserves and put them into dollar securites, thus depressing the US interest rates and increased borrowing.

source, TOI


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Saturday, October 18, 2008

Wealth Erosion of India's Top 10 business houses

Recently financial crisis which caused stock market free fall in all the stock markets throughout the World. Indian Stock market is considered to be worst Asian performer in this financial mayhem. On friday 17-10-2008, India's top business houses lost about whopping 139Bn$ of market capitalization, when compared to their market capitalization on January 2008.

Worst Performers :

1 .Anil Ambani : Loss around 32Bn$, erosion of his wealth by whopping 70%.

2. Mukesh Ambani : Current net worth 22bn$, lost about 54% wealth in this financial mayhem.

3. Sunil Bharti Mittal : His stake in Airtel is valued at about 12bn$, and he lost about 30%.

4. K P Singh : DLF promoter saw is state is just now 1/4 of what it was in the starting of the year. His current stake is roughly around 9bn$.

This figures really showed how bear is looming over stock markets in India.

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Thursday, October 16, 2008

Oil price down on fear of recession.

In this gloomy financial conditions, where everybody is talking of long term global recession, one commodity which is showing more downturn is i.e Oil. Today, Oil prices at Nymex trade is quoted at 69.85$, which is 52% lower from its peak. With less demand of Oil, stocks in some of the countries like Russia, where Oil is a key economy supporter , fall like anything. Russian bourses down around 9% today. Though low oil price will certainly heal some of the sectors which are already suffering from financial crisis, but the continuous lowering of oil prices clearly shows a recession in the global market.

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Wednesday, October 15, 2008

International markets sinks on fear of Recession

Monday and Tuesday stock rallied could not be sustained on Wednesday, with all major indices had a free fall, with Japan Nikkei an exception. Even though both US and European govt. have prepared their multi billion dollar bailout plan, but fear of long term global recession are keeping Investors away from the market. Even after a long delay, Mr. Bernanke agreed that the bailout plan will not show its effect soon, the recovery will take some time, before liquidity flows soothens in this recessionary times, but till then the markets will remain volatile throughout the world.

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Monday, October 13, 2008

Stock market surge.

After Friday's stock market meltdown, today Stock Market in all international markets opened positively. The reason behind sudden stock surge is may be due to intervention of all major govts. in financial markets, which include bailing out ailing banks either by buying low rated assets or buying stakes in banks.

Major markets behavior on Monday, 13-10-2008.

Asian Market :

Hong Kong Hang Sang Index soared by 10.2%
India BSE Sensex soared by 7.6%
Australia Benchmark S&P/ASX soared by 5.6%
Singapore Strats Time Index soared by 6.6%
China Shanghai main Index rose by around 4%
Korea KOSPI index rose by around 4%

European Market :
Britain's FTSE 100 jumped by 8.26%
Germany DAX jumped by 11.40%
France CAC 40 jumped by 11.18%
Switzerland SWX jumped by 11.39%

US :
Dow Jones and S&P 500 index both are up by app. 6%.


Saturday, October 11, 2008

Stock market meltdown

Fridays saw the biggest stock market meltdown on every major bourses throughout the world. Even the back up of ailing financial market by govt. and the central banks through the world , but this act even could not satisfy investors, and every where investors tried to pull out money from stock markets, caused a market free fall. Some of the corporations which enjoyed high market capitalization till starting of the months, saw their capitalization fall to a very low level on Friday.

Some stocks behavior at BSE Sensex :

Sensex Stocks :
Worst Opening of the Day

JP Associates -14.24%
Maruti Suzuki - 9.98%
Infosys -8.32%
ICICI Bank -7.33%
Ranbaxy -6.89%

Lets see how the market will behave as it open on Monday morning, hope the worst is over.


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Thursday, October 9, 2008

Invest your money in Green Economic Sectors.

In such a turbulence financial times, it is very difficult to predict the future scenario. But if one really want to vest one's investment, he/she can really look for company's making investment in Greener solutions.

Sectors which one can look for Investments :
1. Wind Energy.
2. Solar Energy.
3. Bio fuel.
4. Ocean Energy.

Reason :

1. Pollution free energy.
2. Govt. are putting more stress on greener solutions to combat Global Warming.
3. Govt. are looking for much cheaper solutions for energy generation, and loose their dependency on fossil fuels, which are getting costlier and depleting with every day.

Though these turbulent financial will last for some time and the future will not be rosy as it was before, but suddenly investment in above sectors will reap benefit for investors.


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Wednesday, October 8, 2008

Global Central Banks Cut Rates

In order to sail through global financial crisis, and maintain high level of liquidity in the market some of the major Central banks cut interest rates.

Find below the modified interest rates.

Federal Reserve Rate : 1.5%

European Central Bank : 3.75%

Canada Central Bank : 2.5%

Bank of England, UK : 4.5%

Sweden Bank : 4.25%

China Central Bank : 6.3%

Analyst said the in order to maintain liquidity in the market and faith in the financial market system, Central banks may decide to lower the interest rates further down.

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Tuesday, October 7, 2008

Tata books Gujarat for Nano Site

After having at tough times at Singur, W.B. Tata's finally booked Gujarat to develop Nano car.

Some project details :

1. 1100 acres of land have been allocated at Sanand for the project.

2. All Tata auto ancillary vendors will be moved to that area, to support Tata in building world's cheapest cars.

3. Intial rollout of Nano will be done from company's Pune and Pantnagar plants.

4. The official release of Nano has been delayed by 3 months, it will most probably be happen in the last quarter of the year.

Apart from this CM of Gujarat have clarified that it is not a lease agreement, but Tata will be buying the land at prevailing market rates.

Though according to Tata Group Chairman, the Gujarat plant will serve as the Mother plant, while they are still in process to finalize the satellite plant for Nano.

Nano rollout will certainly put Tata amongst the major World Corporate achievers, and at the same time showcase Gujarat as the state for Investment friendliness.

Mohit Kumar

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Monday, October 6, 2008

Corporatize Indian Tourism

There is one sector in India, which is highly scattered and unorganized but have the potential to reap profits in millions and billions and that sector is Tourism. For tourist, India offers rich cultural heritage, beautiful landscape, mountain ranges, monuments, beaches, wild life . With so much to offer, still revenue wise it is way below world ranking.

Where it is lagging behind?
1. Infrastructure : Hotels, railways, roads, airways,information sites. Go to any place in Europe, the infrastructure to tourist place are simply superb, even a first time tourist don't have to worry about the itinerary, everything is available at anytime at anyplace.

2. Security : Security is the main concern for tourist coming to India.

3. Hygienic and Friendly Environment

4. Centralized Tracking System.

5. Regulated Tourist Agents : Most of the tourist agents in India are not regulated, these agents should be regulated to make things economic for both national and international tourists.

6. Unstable borders and communal problems : Unstable borders and communal tensions often deprived tourist to explore some of the famous places in India like J&K.

How Tourism Corporatism will help?

First of all it will help to build required Infrastructure it may be good roads, railways or hotels. With the help of the central and state govt. tourist data can be maintained in the centralized tracking system.Secondly, at famous tourist place instead of govt. police surveillance, private security guards can be deployed, so that tourist considers them to be safe and feel a be like home environment.

Though some of the problems listed above are even beyond the control of Corporates, but still we have a long way to go in order to tap this multi billion dollar industry, and this cannot be achieve until and unless we corporatize this sector.


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Sunday, October 5, 2008

Different Govt. wooing Tata

After Tata's decision of moving out of Singur, different state govt. sensed great opportunity. Many state govt. are now poaching Tata's to invest in their states.Unlike Singur, they know the importance of the project, and what it meant for their state development. They know that their intial relaxation both in terms of tax and other investments, will surely pay for the years to come both for the state development and people over there. It also shows the investment friendliness of the state, without any political bottlenecks.

Govt. wooing Tata :
1. Gujarat : Mundra SEZ is identified as the core place of Tata's Nano project, close proximity to major ports and connectivity to both by rails and roads to major metros, make it one of the ideal place for investments.

2. Andhra Pradesh : AP govt. is wooing Tata's by giving high level of Tax relaxation and place to setup their plants.

3.Karnataka : Same by Karnataka govt.

Such a initative is really needed by any govt. to showcase their Investment friendliness, and with only once concern i.e. development of the region and people over there.

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Saturday, October 4, 2008

Tata out of Singur

Now its is sure that Tata's pet project,Nano, will not be executed from Singur. Tata Group chairman Ratan Tata took this decision, and blamed Mamta Banerjee for all these problems. Tata's decision really will affect future investments in West Bengal. Even some of the existing Investors like real estate giant DLF, is also thinking of moving out of W.B.

The loss for W.B. govt.

Pschological Loss :
1. Depecits as a non friendly investment state.
2. Major influence of Communist parties, will defer further investment in state.
3. Business communities disillusioned by the outflow of Tata.

Monetary Loss:
1. Tata is one of biggest business conglomerate in India, if Nano project would have been successfully executed from Singur, which means more chances of getting more business from other business communities also, but now it will be other way round which results in following consequences less employment, no investment, moving of current investments to other friendly state.

2. Tata's Nano project coming out of Singur received huge appreciation from International Business communities, but afterwards Singur issue was really criticized by International media.This critization made Singur/W.B. unfriendly for International Investments, even India invesmtent friendliness is now being questioned.

3. TCS, Tata IT arm is also being operated from W.B., such unfriendly treatment by the govt, might makr Tata think to move their offices to other neighbouring states, which means more losses.

4. Tata Nano project did not bring only Tata motors to Singur, but hundreds of different auto ancillary providers at one place, which means that if this project would have executed then, Singur could have become a major auto hub, or may be an Auto SEZ.

I sincerly think that this is a big loss for W.B. state.

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Thursday, October 2, 2008

US President urges again for a bailout

After the first initial bailout bill was rejected at Capitol Hill by the house, US President George Bush urges again the house to revisit the bailout plan. He said, that don't consider it as a bailout plan but consider it as a Investment in American Economy to safeguard US taxpayers and International Economy from a long term recession. The bailout is really required to bring faith in the American economy and keep liquidity in the market and to prevent further breakdown of some of the ailing banks in Wall Street.

Mohit Kumar

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Wednesday, October 1, 2008

Market Reaction after Congress Bailout Rejection

The most awaited 700bn$ financial bailout package approved by federal and US treasury on behest of US president George Bush. But somehow the bailout package did not entice US congress and other lawmakers, they totally rejected it. But somehow the global financial markets took this decision positively, with all the major financial markets rose dramatically after a previous day setback. So from the market behavior it is somewhat clear, that market makers or investors want to play a fair game on market and economic sentiments, rather than bailout relief which might give a short term relief from these crisis.

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