stock market

At 16,741 the Sensex lies sixty points away from hitting sixteen thousand eight hundred. We are likely to see 16,800 sometime tomorrow. The level could have been easily breached today but no trading took place on the BSE since the markets were closed on account of Eid. The rally on the Indian markets has been tremendous since the month of May. Even September so far has not spooked the markets. More importantly we are a few sessions away from reaching the 17K level.

The rapid rise of the Sensex has been baffling but no one should complain because a Bull Run is a good thing.

When the markets open next,we’ll be a day away from a brand new month of trades and investments. September is usually but not strictly the month when market indices start to head south. A lot of selling activity takes place during this month. This is a historic trend. To see how the market behaves at a time when the news of late has been much better than before, with the recession receding and all that , will be interesting to observe.

Many of the fund managers and market analysts I’ve heard from seem to agree that at the current levels the Sensex and the Nifty will find it hard to maintain. So are we then heading towards a correction?

Right after the interim budget the Indian equity markets were staring at the possibility of breaching the 9000 level and falling into the 8000 levels (on the Sensex).It happened in a matter of a very few days. The Sensex in the past two trading sessions has also breached the 8500 mark leaving investors pleading and praying that it not fall below the 8000 mark.

Sadly the Sensex is immune to requests. Whether the index actually holds the low 8000 level is dependent on the US markets.

What we are seeing on the Sensex and Nifty are the effects of this long drawn out and seemingly never ending recession. This period of volatility comes at the back of the strong sense of global weakness that has been hovering around for quite some time.

For a country of more than a billion the biggest asset for India is its vast teeming population. It’s been one facet of India which is so dominant yet in economic and financial issues is being brushed aside. For sometime now, government officials have been saying that India can weather this global financial meltdown because the internal and domestic demand for goods and services will ultimately save them. This as we know is a far fetched notion, but there is a lot of truth in the fact that India’s very own domestic demand is capable of denting much of the impact of the global financial crisis.

No one can predict the exact movements of a stock market be it the New York Stock Exchange or the Bombay Stock Exchange. In the midst of the current economic scenario trying to predict their movements becomes even more difficult, almost impossible even. The market continues to be a trader’s nightmare while the average Indian investor either continues to hold on to his shares in the hope that their value will rise or simply decides to cut his losses and dumps them in the market at the current price fearing they’ll be worth a lot lesser tomorrow.

In one single day many Indian investors have lost nearly half their life savings….and they’re the lucky ones. Those who invested as early as January this year at the peak of the Indian markets have seen the value of their investment disappear by at least 80%.Many of them-retired professionals had hoped to make the stock market the instrument that would guide them through their old age. But young or old, everyone was a lot poorer by the time the Bombay Stock Exchange closed early in the evening on Friday. That was perhaps the only silver lining—that it was a Friday. The markets are closed over the weekend. It’s as though the markets have been hit by a giant meteorite and put into a dreadful tailspin.

We did mention earlier that the entire structure of the World Economy is changing and this change has brought about a high impact casualty. The US investment bank Lehman Brothers which survived many a downturn including the Great Depression Of 1929 has announced today that it had filed for bankruptcy. The going bust of Lehman is an indication of the US Sub Prime Crisis and the effect it has on the rest of the world including India. Our Sensex was hammered even before Lehman formally declared bankruptcy, simply anticipating the news of their bankruptcy.