Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Indian bourses fear most - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Sep 19, 2001

    Indian bourses fear most

    There was a sigh of relief in the markets after two consecutive days of unabated selling. The much-needed breather allowed investors to soothen their frayed nerves and rethink the episodes of last week more objectively. The U.S markets also showed some strength with the benchmarks closing marginally lower.

    The strikes at the World Trade Centre threaten to push U.S into a recession, as the crutches of the economy, consumer confidence, give way. We have heard the New York mayor try and boost consumer confidence by asking them to go shopping. A weaker global economy is likely to impact commodities market, which has been sliding since start of the calendar year. But added weakness in the U.S economy leading to cut back on corporate investments is most likely to affect the domestic technology sector, as 60% of the revenues are generated from U.S markets. Murphy does not seem to be leaving technology.

    India's Top Five ($ bn)
    Textiles 9.2
    Gems & Jewellery 7.6
    Agriculture 5.5
    Engineering goods 5.0
    Chemicals 4.5

    Sticking to exports, the impact on the Indian economy is not expected to be significant, as exports contribute only 10% of the country's GDP. On the other hand, our East Asian neighbours have more reason to be worried, as their economies are primarily export driven. U.S is among their principal destinations. Further, exports are primarily technology based -- hardware -- a sector, which is seeing a marked slowdown. Nonetheless, stock market readings seem to portray that India, comparatively, would be a bigger loser.

    Such beliefs seem to be largely supported by the possibility of military action closer to home. The Bush administration has come out very aggressively -- this is a war waged against the civilized world -- against the terrorist attacks. Nothing wrong with that, but a war in the neighbour's backyard is too close for comfort. Also, the Kashmir issue is fluid with Kargil in '99 and a failed summit this year. Fundamentalist groups trained in Central Asia are active in the valley. India's support of the allied forces could lead to increased insurgency at home.

    Asian Markets post WTC strikes
    Singapore -15.0%
    India -12.6%
    Korea -11.9%
    Hong Kong -10.2%
    Pakistan -9.3%
    Japan -5.0%
    China -3.1%

    The strong comeback by U.S could be expected. After all, even President Bush has an electorate he has to keep happy. But, one would expect, America not to act in haste and make responsible judgments. The U.S economy is fragile and the situation getting ugly in the Middle East could make matters worse. Higher inflation when consumer spending is weakening. Higher interest rates when business sentiment is not upbeat. Therefore, U.S too has some thinking to do.

    Back home, to boost investor sentiment the market regulator, SEBI, is contemplating a slew of measures. This could provide some technical strength but investors need to have confidence to re-enter markets. This could take some time leading to market fundamentals remaining weak. Consequently, the measures are not likely to have an immediate effect on the bourses. Some of the measures include:

    • Allowing faster mechanisms for share buyback.
    • Introduction of stock futures in 57 scrips. Also, permitting FIIs across the derivatives market. Currently, FIIs can participate only in index futures.
    • Re-introduction of deferral products. The SEBI and RBI have announced the approval of bank lending for margin trading. Banks can lend a maximum of 60% in a share purchase transaction.

    In the immediate term the visibility is very poor, as one does not know how the jigsaw falls in place. Although the spectre of war hangs over the bourses the markets may start reflecting the possibility that the situation may not reach 'threatcon delta' in India. But the third quarter comes to an end in U.S. This could start confession season, which again is a dampner for the domestic markets.



    Equitymaster requests your view! Post a comment on "Indian bourses fear most". Click here!


    More Views on News

    How to Ride Alongside India's Best Fund Managers (The 5 Minute Wrapup)

    Jun 10, 2017

    Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.

    Why NOW Is the WORST Time for Index Investing (The 5 Minute Wrapup)

    Aug 18, 2017

    Buying the index now will hardly help make money in stocks even in ten years.

    Trump Takes a Beating (Vivek Kaul's Diary)

    Aug 18, 2017

    Donald J Trump, a wrasslin' fan, took a 'Holy Sh*t!' blow on Tuesday.

    How To Read Your Mutual Fund Account Statement Correctly (Outside View)

    Aug 17, 2017

    PersonalFN simplifies the mutual fund account statement for you.

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process) (The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 18, 2017 (Close)