Stock markets hit by 'terror' - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Stock markets hit by 'terror'

Sep 12, 2001

Yesterday's terror attacks in the US have for now put to rest any anticipation of a near term rally. This is not because of the impact on exports or growth but due to uncertainty surrounding the incident. The uncertainty pertains to whether a Gulf War like situation may arise. The US has been attacked and there is a lot of speculation regarding retribution. Already, oil prices have surged and stock markets have reacted very sharply.

However, India seems to be much better prepared this time.

Our external debt position is very comfortable. Total external debt stood at US$ 100 bn at the end of FY01, which is near about 21% of GDP (as recently as 1992, this ratio stood at 40% or thereabouts). Of this short term debt was just US 3.4 bn i.e. 3.5% of GDP. Given our foreign exchange reserves of nearly US$ 45 bn (as in August 2001), there is a little chance of a repeat of a Gulf War like situation.

Moreover, India's exports constitute roughly 10% of national GDP. Given this modest component of our national income, and the fact that our exports are well diversified, the impact will be marginal.

  • More on the Indian Economy

    What is critical for India is how crude prices react to these developments. This is because even though we may be able to overcome this situation financially, the impact due to high crude prices could be detrimental to any hopes of a near term recovery. High crude prices would contribute to inflation, which would have a direct impact on demand. Higher inflation in turn would limit the ability of the RBI to cut interest rates to boost economic growth.

    The US markets remained closed yesterday and are likely to remain so today. Other international markets have recorded a sharp fall. Gold on the other had has recorded gains. Historically, gold prices react positively to adverse developments.

  • See Gold's journey over the years

    The situation is one of uncertainty. Investors need to be cautious.

  • Equitymaster requests your view! Post a comment on "Stock markets hit by 'terror'". Click here!


    More Views on News

    The Top 6 Artificial Intelligence Plays in India (Views On News)

    Dec 6, 2021

    Investors looking to tap into AI theme need to keep an eye on tech firm leveraging the power of AI are making things possible.

    6 Penny Stocks that Rallied 1,000%+ in One Year (Views On News)

    Dec 6, 2021

    These penny stocks shed their penny status by surging 1,000% or more in the last one year.

    6 Popular Stocks that Turned into Penny Stocks (Views On News)

    Nov 27, 2021

    A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

    All You Need to Know about the Newly Launched Bharat Bond ETF 2032 (Outside View)

    Dec 7, 2021

    Bharat Bond ETF - 2032 is a new fund offer that will follow a buy-and-hold investment strategy tracking the constituents of Nifty Bharat Bond - April 2032 index.

    Stocks You Should Buy, Even if the Market Falls (Profit Hunter)

    Dec 7, 2021

    Here is how to approach smallcap investing as markets get nervous.

    More Views on News

    Most Popular

    Infosys vs TCS: Which is Better? (Views On News)

    Nov 26, 2021

    In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

    This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

    Nov 24, 2021

    Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

    6 Popular Stocks that Turned into Penny Stocks (Views On News)

    Nov 27, 2021

    A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

    India's Top 5 Monopoly Stocks to Watch Out for (Views On News)

    Nov 30, 2021

    These 5 companies dominate their sectors with a huge piece of the pie.

    The Biggest Winners and Losers in India's Transition to Electric Vehicles (Profit Hunter)

    Nov 26, 2021

    How India's EV transition could be a major headwind for the incumbents.


    Become A Smarter Investor
    In Just 5 Minutes

    Multibagger Stock Guide 2022
    Get our special report Multibagger Stocks Guide (2022 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Dec 7, 2021 12:28 PM