Wednesday, August 22, 2007

 

India stock update 23 August 2007

The last week and a half have seen a major period of volatility in the stock market. The sub-prime crisis in the US and its impact on major banks, Financial Institutions and Hedge funds had a major impact on liquidity and caused a downfall in sentiment world wide. This crisis showed how most major world markets are connected, primarily through the money invested in these markets. India has a sizeable dependency on Foreign Institutional Investors, and a fair amount of their money is in turn composed by US funds and Hedge funds. When this crisis broke, and sentiment was down, there was also a big pressure on redemption, and to pay out redemption, there was heavy selling in various world markets, including the Indian market.
So, the level of volatility displayed, with the market either showing big up or down jumps caused a big scare in the market. And that is what the market has been doing now for some time, either jumping way up or way down. So, it is tempting to invest say when the market is down, but you can never time the exact down of the market. I am right now holding still, trying to restrain myself, although I am investing a bit in some Mutual Funds such as Franklin Flexicap and SBI Magnum, and looking at shares such as Era Con, Reliance Industries, Walchandnagar, etc that have fallen.

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Comments:
The emerging markets have been extraordinarily robust performers so far in the new millenium. Is this going to be a period of consolidation or decline? Some analysis of the various India fund schemes has been put forth at http://www.indiafund.net
 
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