New York Sank Last Night, Will Bombay Sink On Monday?
Manmohan Singh re-capitalised PSU Banks 15 years ago, and will end his career the same way after the disastorous Budget presented by Chidambaram.
Indian’s need to change their lives now-sell all assets, buy agricultural land and liberally borrow from PSU Banks. There is no tax on agricultural income, so income goes tax free. Then after years of making partial bad debt provisions, you will not have to pay-off the Bank Debt.
The Bank bail-out will be funded by taxing Stock market transactions…simple.
In a painful year for Wall Street, even the shortest month couldn’t end soon enough.
Stock markets sank on Friday — Leap Day — after a new round of credit woes and a painful dose of weak economic reports reignited fears that a recession may be imminent.
The Dow Jones industrials plunged 315 points, and every major index shed more than 2.5 percent. The Standard & Poor’s 500-stock index is off to its worst start to a year since 1941.
“The drumbeat of economic news has been unrelentingly bad,” said Edward Yardeni, an investment strategist. “The recession scenario is looking more and more credible.”
The market was poised for a poor opening after American International Group, the world’s largest insurer, posted the worst quarterly loss in company history Thursday night. The Dow was off 100 points shortly after the opening bell.
The sell-off accelerated from there. A bellwether report on Midwestern business activity unexpectedly fell to its lowest level in more than six years. A survey showed consumer confidence at a 16-year low. And analysts predicted that banks stand to lose an additional $350 billion from the subprime mortgage collapse.
The bad news added up, and so did the losses. At the closing bell, the Dow had given up 315.79 points, or 2.5 percent, to 12,266.39. All 30 of its components closed down.
The S.& P. lost 2.7 percent, to finish at 1,330.63. The technology-heavy Nasdaq composite index dropped 2.6 percent, to 2,271.48.
“Fridays have become very difficult days for the markets,” said Ryan Larson, a trader at Voyageur Asset Management in Chicago. “Given the uncertain environment, nobody wants to buy into a weekend unless they have good reason.”
Shares of financial services firms, an albatross on the market for months, led the losses on Friday. A.I.G. stock tumbled 6.5 percent. Shares of MF Global shed 18 percent after the brokerage firm was hit with downgrades from ratings agencies stemming from an unauthorized trading incident earlier this week.
Treasury yields plummeted as investors flocked to the safe havens of government bonds. The dollar, already at a record low, ran flat against the euro but fell against the yen. Crude oil futures fell back slightly after flirting with their all-time high earlier in the week.
The losses followed declines in overseas markets. The Nikkei 225 index in Tokyo lost more than 2.3 percent, and the major European indexes were down around 1.5 percent at the close.
“Investors try to ignore the underlying trends — credit conditions and economic indicators — and jump on anything that says this will go away soon,” Mr. Yardeni said. “And then you get hit on the head with the more serious underlying issues in the credit markets and the economy and you realize that the bullish news just isn’t enough.”
Indeed, the Midwestern business report was only one piece of a host of poor economic news that rattled investors on Friday, underscoring anxieties that the nation is facing one of the worst economic landscapes in decades.
Consumer confidence plunged in February to a 16-year low, according to a survey by Reuters and the University of Michigan, as rising inflation forced Americans to spend more and save less.
Income growth slowed in January and consumer spending was flat when adjusted for inflation, the Commerce Department said. For the first time in at least 50 years, Americans spent more than they earned for the third consecutive month.
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What does it mean for us? The Indian Budget coupled with slowing US economy has been construed as a recipe for disaster. The please all budget intends to fund its Rs 60000 crore to the farmers by adding to the capital gains tax, thereby discouraging trading. Long term investors (like me) are spared. No doubt, it would reduce volatility and encourage people to delve into the stock market only for investment purposes. But it would also reduce the responsiveness the Indian bourses have to the world conditions. In the event of FIIs making an exit due to (subprime) crisis, it will not enable retail investors to book profits (or losses) easily.
It has been seen in the past that when US sneezes, the the world catches cold. In the recent past, there have been instances when the bellwether index has kept up in the face of the impending storm, thereby implying that India is no longer a volatile Market, it is an economy of opportunities where funds can be parked (subject to stringent regulations,though). But my opinion is that with the budget proposals on the capital gains tax and the falling US indexes, India may also feel the brunt.