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Been a swinging week… - Views on News from Equitymaster
 
 
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  • Mar 17, 2001

    Been a swinging week…

    There has been little respite for the markets in the current week with each round of bad news pounding the indices further. As the bulls and bears fight it out in the jungle (exchange) the benchmark indices are swinging wildly putting even the king of the jungle, Tarzan, to shame.

    The constant flow of bad news commenced with the budget week. The Reserve Bank of India had been pulling up Global Trust Bank (GTB) for violating prudential lending guidelines. To fulfill the lending norms the Bank had to cut back on its exposure to the capital markets. This could have triggered off the current payment crisis with few key bull operators not being able to meet their commitments to the exchange. As the slide engulfed other regional bourses the parties with long positions faced greater problems. However, the reason for the slide hit the stand that few key brokers had been furnished with privileged information, which enabled them to choke the markets. The story was spicy as it involved individuals from the top echelons of the bourses and the regulatory authority. But as if this was not enough, an expose on the defence deals rocked both the ministry and the Indian Government. Consequently, markets have ever since been gyrating, frightening away the retail investor, as the actors (also the script writer) work out a happy ending for themselves.

    Adding to the political turmoil is Ms. Mamta Banerjee who has pulled out of the coalition government. This has increased nervousness in the markets, as instability at the centre would bring with it a host of other problems (delayed reforms and another election).

    The NASDAQ continues to remain weak. However, as corporate America gears up for a slow down and a possible recession, top blue chips on the Dow are now facing the music. Consequently, the Dow has closed below 10,000. This may not augur well for the old economy counters. The technology-laden index, NASDAQ, meanwhile has fallen below 1,900 and tech stocks could see a fresh round of pounding on the domestic bourses.

    The quantum of bad news entering the markets makes one wonder that the position of the stars may not be favourable for the capital markets. And Mr. Sinha must surely be cursing his luck. Besides, an understanding of the field of finance, analysts may now have to start tracking the stars.

     

     

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