Market View

What`s your survival strategy?

Posted by : latikav

Housewife Kamakshi Janardhan, 28, built a portfolio of software stocks in March 2007 when the going was good- inflation was benign, industrial growth was robust and the economy showed no signs of strain. Among the stocks she picked was Infosys Technologies, at Rs 2,010 per share. In September 2008, the stock is down to Rs 1,445, having touched a low of Rs 1,255 earlier, and her overall portfolio is down 25 per cent following the fall in stock prices. Janardhan had borrowed money to pay for a part of her portfolio. So, the falling market and interest payments were a double blow. But she`s unperturbed. "The markets will bounce back in a few months," she says.



Siddharth Bamare
The value of most asset classes has dipped in recent times. Even those who put their money into what many reckon to be a safe bet- debt instruments-have burnt their fingers. The real returns (nominal returns minus inflation) have been negative for a long time now. While inflation is hovering at more than 12 per cent, investors are making a maximum of 11 per cent on their debt funds. On the other hand, expenses have gone up, resulting in lower savings for the investor. Gold, too, has dropped from more than Rs 13,000 per 10 gm in mid-March 2008 to Rs 11,500 before recovering to Rs 13,000-levels in the last week of September (see page 186). Not surprisingly, many investors are being squeezed in this market. But you should use these tough times to consolidate your position. Experts see opportunity in the current bout of calamity. Here are a few strategies that will help set you up for the next wave.

Think long-term
The first thing a person playing the stock market should figure out is what he wants to be-an investor, trader or a speculator. "Unfortunately, most people are unable to make that distinction. When they want to be investors, they unwittingly end up being speculators," says Ashok Jainani, Head (Research), Khandwala Securities, Mumbai. Investors look for absolute returns from equity in a short time. But in the short-term, equity markets are volatile.

Don`t shun equities
Just because markets have tanked in recent months, and consumer goods inflation is ruling high, it does not mean the macroeconomic conditions will remain like this for long. "Inflation will cool off from now on," predicts Om Ahuja, Executive Vice President & Country Head (Investment Management), YES Bank. He expects the volatility to continue for another six-to-nine months, and reckons it is time investors looked at investing gradually. "Everyone should participate in equity irrespective of the market scenario," says Siddharth Bamare, Head (Investment Advisory), Angel Trade, Mumbai. Equity has, historically, delivered higher returns than any other asset class over the long term. "If you have knowledge and time, you can trade yourself. Otherwise, invest in mutual funds (MFs). In these volatile times, one should invest for 6-12 months in a systematic investment plan (SIP)," he suggests.


Ashok Jainani
Revamp your equity holdings
Bad times are a good time to rid yourself of dud stocks and concentrate on robust, profitable companies with growth potential. These growth stocks also take a beating in a falling market. But that should spell opportunity for long-term investors. Don`t worry about booking losses on your dud stocks as they might take a long time to move in a recovery. Solid growth stocks will be the first to move, but take a stock specific approach. Says Jainani: "Concentrate on large companies with strong businesses." Then, investors can diversity their funds across portfolios within and outside the country. "That will help spread the risk, away from just one country. It is equally important to keep watching futures and options (F&O) market, which one must approach from a hedging perspective," adds Bamare.

Try debt FMPs
Those unwilling to risk the markets have opportunities in Fixed Maturity Plans (FMPs). With interest rates shooting up, they can provide a higher allocation to such products. "Of course, an investor needs to ensure a good portfolio of underlying papers in the FMP. Liquid funds are a good option and tax-efficient, too," says Samir Bimal, Country Head, ING Private Banking, India. When markets swing wildly due to short-term events, investors must move into liquid funds, suggests Jainani. But Ahuja expects interest rates to come down over the next two-to-three quarters, and, therefore, feels that investors can consider parking their money in high-yielding deposits and debt instruments like FMPs, which can give them good yield for 12-13 months, and tax benefits, too. While they may not beat inflation, they will help reduce the losses. "The time has come for investors sitting on cash to deploy it in high yielding portfolio deposits and FMPs," says Ahuja.


continued.........................

WILL NIFTY HIT 3600 & SENSEX TOUCH 12000

Posted by : BullSheetRules

So DOW closed well above BS expectation of 9800+ value!

Dow closed in four digit figures.

9,955.50
-369.88 (-3.58%)
Oct 6 - Close

That four figures should be good enough to create all kind of scary and fearful headlines. That four figures will now put PRESSURE on different BIG PLAYers to take some steps!

Scope is still for some Downside to that 9800 on closing basis in 1-2 days!

Let us hope positive news along with rate cuts, better corporate results along with new accounting norms starts coming up!

Rally on DOW should be expected soon!

Gud luk & happy investing! :)

The End of Wall Street

Posted by : sambala

Oil settles down $6.07 at $87.81 a barrel, as markets reel from global credit crisis.

WILL NIFTY HIT 3600 & SENSEX TOUCH 12000

Posted by : pkjattking

Yes .... hopefully now Dow has shaken losers below the belt.... breaking 10,000 and media working jumping ... helps drive the fear factor....

WILL NIFTY HIT 3600 & SENSEX TOUCH 12000

Posted by : BullSheetRules

lol.. Dow is 10000+ ...

did ya read all those Media scary, fearful headlines when Dow was going DOWN to 9800 level as per BS expectations :)

Unfortunately, that is what BS media will report about that four digit figures of DOW!

gud luk & happy investing! :)

WILL NIFTY HIT 3600 & SENSEX TOUCH 12000

Posted by : pkjattking

Look Dow is trying to close above 10000... I can not believe it...

WILL NIFTY HIT 3600 & SENSEX TOUCH 12000

Posted by : BullSheetRules

Dear pkjattking,

Dow is already on that suicidal path!

9570 is the low so far...

Let us hope Big PLAYERS PLAY sensibly tomorrow in Indian markets!

YEN DOLLAR ratio close to 100.5 ... watch that for long term trend in equity markets!

Gud luk & happy investing!

WILL NIFTY HIT 3600 & SENSEX TOUCH 12000

Posted by : pkjattking

looks like now its brushed off that 9800 mark..... Dow want to suicide it self........

WILL NIFTY HIT 3600 & SENSEX TOUCH 12000

Posted by : BullSheetRules

DOW market is making moves based on the proceeding that is going on FULD! :)

Gud luk & happy investing! :)

Black Monday II: the worst for decades

Posted by : sambala

European Banks: The Bailouts Continue

A series of government interventions are in the works as investors and politicians realize Europe is facing a banking crisis of its own

If the $700 billion mortgage bailout plan in the U.S. was supposed to calm global investors, someone forgot to tell Europe. Stock indexes from Paris to Frankfurt plunged as much as 9% on Oct. 6 over worries of a spreading crisis among European banks. A series of government interventions over the weekend and on Monday—following last week`s sudden bailouts and guarantees (BusinessWeek . com, 9/29/08)—only seemed to fan the flames of anxiety.

Investors and politicians are waking to the realization that Europe faces a banking and economic crisis of its own not linked solely to bad U.S. subprime debt. Since the credit crunch first hit 15 months ago, lending in the Old World has gotten tighter and tighter, and now the lack of capital flow is taking down globe-straddling European banks, threatening businesses with credit starvation, and roping in cash-strapped governments for multibillion-dollar, 11th-hour rescues.

"Banking is like religion: It`s all about trust and confidence," says Bob McDowall, European research director at financial-services consultancy Tower Group in London. "Governments and regulators are trying to demonstrate firm leadership and show confidence, but banks don`t trust each other."

Exposing Deep Holes

That lack of trust is a major cause of Europe`s worsening bank crisis. Aside from a few exceptions such as UBS (UBS), the Old World`s financial institutions weren`t as exposed to toxic mortgages as their American counterparts, and they`ve had a year to clean up their balance sheets. But the sudden nosedive in the U.S.—especially the collapse of Lehman Brothers—has virtually frozen European lending and exposed deep holes at institutions such as Belgium`s Fortis (FOR.BR) and Germany`s Hypo Real Estate Group (HRXG.DE).

Complicating the picture in Europe is that no central mechanisms exist to carry out a coordinated regionwide response of the sort engineered in the U.S. The European Central Bank has a more limited mandate than the Federal Reserve, and no EU equivalents exist to the U.S. Treasury Dept. or Securities & Exchange Commission.

That has left governments to tackle the crisis on a country-by-country basis, with sometimes divergent solutions that can even make matters worse for neighboring countries. A weekend meeting in Paris of top European leaders, called by Nicolas Sarkozy, the President of France and current holder of the EU`s six-month rotating presidency, made no evident progress in hammering out a framework for a regional solution.

"Europe`s piecemeal approach hasn`t helped build confidence," says Jeremy Batstone-Carr, director of private client research at stockbrokers Charles Stanley (CAY.L) in London. "Some form of coordinated response is necessary, but we haven`t seen that yet."

Rising Anxiety

The market tailspin on Oct. 6 was linked to the sense of panic engendered by the rolling country-specific reactions. Last week, for instance, the market was shocked and surprised by an €11.2 billion ($15.3 billion) part-nationalization of Fortis bank (BusinessWeek . com, 9/30/08), which signaled that bank`s balance sheet was in more trouble than previously thought. By Oct. 3, though, it became clear that more medicine was needed, and the Dutch government announced its intention to buy a 100% stake in Fortis` local operations for €16.8 billion ($22.9 billion).

More drama was to come over the weekend.

Black Monday II: the worst for decades

Posted by : sambala

European Banks: The Bailouts Continue

A series of government interventions are in the works as investors and politicians realize Europe is facing a banking crisis of its own

If the $700 billion mortgage bailout plan in the U.S. was supposed to calm global investors, someone forgot to tell Europe. Stock indexes from Paris to Frankfurt plunged as much as 9% on Oct. 6 over worries of a spreading crisis among European banks. A series of government interventions over the weekend and on Monday—following last week`s sudden bailouts and guarantees (BusinessWeek . com, 9/29/08)—only seemed to fan the flames of anxiety.

Investors and politicians are waking to the realization that Europe faces a banking and economic crisis of its own not linked solely to bad U.S. subprime debt. Since the credit crunch first hit 15 months ago, lending in the Old World has gotten tighter and tighter, and now the lack of capital flow is taking down globe-straddling European banks, threatening businesses with credit starvation, and roping in cash-strapped governments for multibillion-dollar, 11th-hour rescues.

"Banking is like religion: It`s all about trust and confidence," says Bob McDowall, European research director at financial-services consultancy Tower Group in London. "Governments and regulators are trying to demonstrate firm leadership and show confidence, but banks don`t trust each other."

Exposing Deep Holes

That lack of trust is a major cause of Europe`s worsening bank crisis. Aside from a few exceptions such as UBS (UBS), the Old World`s financial institutions weren`t as exposed to toxic mortgages as their American counterparts, and they`ve had a year to clean up their balance sheets. But the sudden nosedive in the U.S.—especially the collapse of Lehman Brothers—has virtually frozen European lending and exposed deep holes at institutions such as Belgium`s Fortis (FOR.BR) and Germany`s Hypo Real Estate Group (HRXG.DE).

Complicating the picture in Europe is that no central mechanisms exist to carry out a coordinated regionwide response of the sort engineered in the U.S. The European Central Bank has a more limited mandate than the Federal Reserve, and no EU equivalents exist to the U.S. Treasury Dept. or Securities & Exchange Commission.

That has left governments to tackle the crisis on a country-by-country basis, with sometimes divergent solutions that can even make matters worse for neighboring countries. A weekend meeting in Paris of top European leaders, called by Nicolas Sarkozy, the President of France and current holder of the EU`s six-month rotating presidency, made no evident progress in hammering out a framework for a regional solution.

"Europe`s piecemeal approach hasn`t helped build confidence," says Jeremy Batstone-Carr, director of private client research at stockbrokers Charles Stanley (CAY.L) in London. "Some form of coordinated response is necessary, but we haven`t seen that yet."

Rising Anxiety

The market tailspin on Oct. 6 was linked to the sense of panic engendered by the rolling country-specific reactions. Last week, for instance, the market was shocked and surprised by an €11.2 billion ($15.3 billion) part-nationalization of Fortis bank (BusinessWeek . com, 9/30/08), which signaled that bank`s balance sheet was in more trouble than previously thought. By Oct. 3, though, it became clear that more medicine was needed, and the Dutch government announced its intention to buy a 100% stake in Fortis` local operations for €16.8 billion ($22.9 billion).

More drama was to come over the weekend.

Black Monday II: the worst for decades

Posted by : sambala

European Banks: The Bailouts Continue

A series of government interventions are in the works as investors and politicians realize Europe is facing a banking crisis of its own

If the $700 billion mortgage bailout plan in the U.S. was supposed to calm global investors, someone forgot to tell Europe. Stock indexes from Paris to Frankfurt plunged as much as 9% on Oct. 6 over worries of a spreading crisis among European banks. A series of government interventions over the weekend and on Monday—following last week`s sudden bailouts and guarantees (BusinessWeek . com, 9/29/08)—only seemed to fan the flames of anxiety.

Investors and politicians are waking to the realization that Europe faces a banking and economic crisis of its own not linked solely to bad U.S. subprime debt. Since the credit crunch first hit 15 months ago, lending in the Old World has gotten tighter and tighter, and now the lack of capital flow is taking down globe-straddling European banks, threatening businesses with credit starvation, and roping in cash-strapped governments for multibillion-dollar, 11th-hour rescues.

"Banking is like religion: It`s all about trust and confidence," says Bob McDowall, European research director at financial-services consultancy Tower Group in London. "Governments and regulators are trying to demonstrate firm leadership and show confidence, but banks don`t trust each other."

Exposing Deep Holes

That lack of trust is a major cause of Europe`s worsening bank crisis. Aside from a few exceptions such as UBS (UBS), the Old World`s financial institutions weren`t as exposed to toxic mortgages as their American counterparts, and they`ve had a year to clean up their balance sheets. But the sudden nosedive in the U.S.—especially the collapse of Lehman Brothers—has virtually frozen European lending and exposed deep holes at institutions such as Belgium`s Fortis (FOR.BR) and Germany`s Hypo Real Estate Group (HRXG.DE).

Complicating the picture in Europe is that no central mechanisms exist to carry out a coordinated regionwide response of the sort engineered in the U.S. The European Central Bank has a more limited mandate than the Federal Reserve, and no EU equivalents exist to the U.S. Treasury Dept. or Securities & Exchange Commission.

That has left governments to tackle the crisis on a country-by-country basis, with sometimes divergent solutions that can even make matters worse for neighboring countries. A weekend meeting in Paris of top European leaders, called by Nicolas Sarkozy, the President of France and current holder of the EU`s six-month rotating presidency, made no evident progress in hammering out a framework for a regional solution.

"Europe`s piecemeal approach hasn`t helped build confidence," says Jeremy Batstone-Carr, director of private client research at stockbrokers Charles Stanley (CAY.L) in London. "Some form of coordinated response is necessary, but we haven`t seen that yet."

Rising Anxiety

The market tailspin on Oct. 6 was linked to the sense of panic engendered by the rolling country-specific reactions. Last week, for instance, the market was shocked and surprised by an €11.2 billion ($15.3 billion) part-nationalization of Fortis bank (BusinessWeek . com, 9/30/08), which signaled that bank`s balance sheet was in more trouble than previously thought. By Oct. 3, though, it became clear that more medicine was needed, and the Dutch government announced its intention to buy a 100% stake in Fortis` local operations for €16.8 billion ($22.9 billion).

More drama was to come over the weekend.

Black Monday II: the worst for decades

Posted by : sambala

European Banks: The Bailouts Continue

A series of government interventions are in the works as investors and politicians realize Europe is facing a banking crisis of its own

If the $700 billion mortgage bailout plan in the U.S. was supposed to calm global investors, someone forgot to tell Europe. Stock indexes from Paris to Frankfurt plunged as much as 9% on Oct. 6 over worries of a spreading crisis among European banks. A series of government interventions over the weekend and on Monday—following last week`s sudden bailouts and guarantees (BusinessWeek . com, 9/29/08)—only seemed to fan the flames of anxiety.

Investors and politicians are waking to the realization that Europe faces a banking and economic crisis of its own not linked solely to bad U.S. subprime debt. Since the credit crunch first hit 15 months ago, lending in the Old World has gotten tighter and tighter, and now the lack of capital flow is taking down globe-straddling European banks, threatening businesses with credit starvation, and roping in cash-strapped governments for multibillion-dollar, 11th-hour rescues.

"Banking is like religion: It`s all about trust and confidence," says Bob McDowall, European research director at financial-services consultancy Tower Group in London. "Governments and regulators are trying to demonstrate firm leadership and show confidence, but banks don`t trust each other."

Exposing Deep Holes

That lack of trust is a major cause of Europe`s worsening bank crisis. Aside from a few exceptions such as UBS (UBS), the Old World`s financial institutions weren`t as exposed to toxic mortgages as their American counterparts, and they`ve had a year to clean up their balance sheets. But the sudden nosedive in the U.S.—especially the collapse of Lehman Brothers—has virtually frozen European lending and exposed deep holes at institutions such as Belgium`s Fortis (FOR.BR) and Germany`s Hypo Real Estate Group (HRXG.DE).

Complicating the picture in Europe is that no central mechanisms exist to carry out a coordinated regionwide response of the sort engineered in the U.S. The European Central Bank has a more limited mandate than the Federal Reserve, and no EU equivalents exist to the U.S. Treasury Dept. or Securities & Exchange Commission.

That has left governments to tackle the crisis on a country-by-country basis, with sometimes divergent solutions that can even make matters worse for neighboring countries. A weekend meeting in Paris of top European leaders, called by Nicolas Sarkozy, the President of France and current holder of the EU`s six-month rotating presidency, made no evident progress in hammering out a framework for a regional solution.

"Europe`s piecemeal approach hasn`t helped build confidence," says Jeremy Batstone-Carr, director of private client research at stockbrokers Charles Stanley (CAY.L) in London. "Some form of coordinated response is necessary, but we haven`t seen that yet."

Rising Anxiety

The market tailspin on Oct. 6 was linked to the sense of panic engendered by the rolling country-specific reactions. Last week, for instance, the market was shocked and surprised by an €11.2 billion ($15.3 billion) part-nationalization of Fortis bank (BusinessWeek . com, 9/30/08), which signaled that bank`s balance sheet was in more trouble than previously thought. By Oct. 3, though, it became clear that more medicine was needed, and the Dutch government announced its intention to buy a 100% stake in Fortis` local operations for €16.8 billion ($22.9 billion).

More drama was to come over the weekend.

Black Monday II: the worst for decades

Posted by : sambala

More than £93 billion was wiped from the value of the UK`s biggest companies today as London`s FTSE 100 suffered its biggest fall since Black Monday.


As fear swept through global markets and governments rushed to prop up banks across Europe the Footsie slumped 7.8 per cent - its largest one-day percentage decline since the aftermath of Black Monday in October 1987.

The index closed 391.1 points lower at 4589.2 - its lowest close total since October 2004 - as investors were rocked by the latest turmoil in the European banking sector.

But Chancellor Alistair Darling - reportedly considering moves to shore up UK banks with taxpayers` cash - did little to restore shattered confidence with firm commitments.

He said "all practical options must remain open" for dealing with the crisis, but added that it would be "irresponsible" to give a running commentary on plans.

In London, trading screens turned red after a weekend in which European governments rushed to support failing banks hit by lack of funds.

CMC Markets analyst James Hughes said: "I`ve never seen anything like this. What we are seeing over the last few weeks is a once-in-a-lifetime event."

The pressure came after German lender Hypo Real Estate became the latest to receive state aid.

Italy`s largest bank, Unicredit, also warned on profits after announcing asset sales and plans to shore up its balance sheet with a 6.6 billion euro (£5.1bn) boost.

Meanwhile, French bank BNP Paribas agreed to buy a majority stake in struggling bank Fortis - which is already part-nationalised.

Elsewhere, Iceland`s stock exchange suspended trading in shares of six major banks as its Government works on an economic rescue plan. Iceland`s Glitnir bank was nationalised last week.

The shockwaves reverberated through global stock markets. In the US, Wall Street`s Dow Jones Industrial Average traded below the 10,000 mark for the first time in more than three years.

In Asian markets, Japan`s