Sunday, January 20, 2008

 

India stock market update 21 January 2008

As I write this, the Indian stock market has seen a decent correction (some would call it drastic). The sensex has fallen around 3000 points in around 2 weeks, which is a significant fall, but the severity of intra-day falls has been worrisome, and especially the weakness shown in the last 1-2 hours of trading. What typically happens is that the market does a bit of up or down, and may have been actually up till around 2 PM, and then a severe bit correction happens where the market may swing by around 200 points down. If you see a graph of the day's movements, then the sharpness of the line is visible.
There seem to be multiple reasons propounded for this drop:
1. The markets have gone up tremendously over the past few months, and a correction seemed imminent
2. The immense IPO of Anil Ambani's Reliance Power pulled in a huge amount of money from the market and decreased to a large extent the liquidity available in the system
3. The sub-prime crisis has been hitting Financial Institutions the world over pretty badly, with many of the US based ones showing heavy losses. In such cases, they have been selling in order to get some money back and improve their financials.
Currently, I am just sitting tight, not investing more money other than looking at what I own currently, since I am not sure about when the recovery will happen.

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