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 data collected from http://finance.yahoo.com/;
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 :)
3 comments:
The basic views of FIIs is : LONG TERM. They are here to make profits. Profits in the Indian markets are expected to multiply along with the growth of the economy (Expected growth). The present rate of returns from the investments on Indian Bourses is much more than that from the DEVELOPED Markets.
Also look at the paradox...
The FII's are holding a major chunk of the market on the bourses. If they withdraw say 1% of their holdings for the sake of Profit Booking OR whatever reasons, then the effect on the market will be so significant that the market will go spininng & down, which will not be encouraging for them. Yes they can with draw - surely in Theorey - if they decide it even at a cost of booking loss (e.g. if they come across better pastures &/or if they see a threat in India).
Accepted; I agree with you in totality.
Mehul,
Let me clarify a couple of things ...
1. PF management is an option in 4th Sem so guts don't come into the picture.
2. At 16,720 odd you are closer to 17,000 and not 16,000.
3. It's a structural weakness in the market, if you know what I mean. You'll probably see 15,000-18,000 for some time.
4. Our politicians don't have a HUGE stake in markets. FOMC has cut lending rates 75 bps to cushion an impending fall. Everybody was betting a 1000 point fall on Dow today. People were totally bearish on futures. And, look what FOMC have done. Tomorrow we would see this free fall getting arrested.
5. As an engineer I would have loved to be on the big-shots list but then Physics Hons. would have made me a market champion!!
~SM
Post a Comment