Here is trying to make some sense out of sensex. Read it & you thought, “Big deal, just remove the ‘x’”! Well, I too wish it were that simple…but then I wouldn’t get paid for that! The point is to just see how things have changed in the recent past.
Have you ever thought why do engineers make some of the biggest investment big-shots? Because they understand the Laws of Physics very well and they know, "What goes up, has to come down!"
The entire financial community is crying about the sub-prime crisis hitting all the markets everywhere in the world. Yesterday, India joined the bandwagon fulltime. Though there were a few ups & downs time and again, this was something which was not expected. After the crisis hit, the BSE Sensex had crossed the magical 20,000 figure a number of times and managed to stay there for a while too, but the ultimate logic won yesterday. To simplify it and put it in nursery rhymes’ fashion (…after all, I'm still in a school; so what if they call it a 'B-School' eh?):
Dow came down and broke its crown,
And we (Sensex) came tumbling after!
Just yesterday, an unlucky bunch of MBAs who were studying portfolio management (imagine doing that after getting placed and it being the last semester, haven't they got guts??) discussing about the fall of the markets and were saying "That's it, it can't go beyond 17,000". As per the breaking news, Sensex closed today at 16,729.94!
Just then, I thought of having some fun with these numbers. After all, I’ve done my majors in Finance/Banking and these numbers have been the things that quite a few of my nights have revolved around... (Don't imagine me doing 'it' to a zero, they were those infernal assignments...) So I just thought about having some fun with them for a change & came up with something interesting:
The closing value of BSE Sensex as on 27-Aug-97 (about 11 years ago from today) was 4,097.56; the fall in Sensex in the last bear trend starting from 11-Jan-08 (which has completed 11 days today) is 4,097.51!!!
All the values considered are adjusted closing quotes of the day;
Today's Sensex closing quote being 16,729.94.
And it doesn't end here, instead it keeps getting better (or worse?)! What do you think the market regulators can do about this?? There were times, just in not-so-distant-past, that a statement from the government's inner circles could considerably increase the subscription percentage of IPOs. And Mr. Arun Shourie would be quoted in papers the next day saying, “A frown from the market regulator is enough to pep up the market!" with a deadly style only a moustache bearer clad in a safari suit can wield...
I bet that today Mr. Reddy, Mr. Damodaran and all their allies would be frowning a million times and still not help a thing; I wonder where have their powers gone since Liberalisation took place!? Are they in the coat pocket of Mr. Ben Bernanke which is being dry-cleaned by close associates of Mr. Mervyn King in a posh laundry in Paris? Or has it been bangalored to money-launderers back home???
Think about it...
Hasmukh :)
