The Indian Stock Market Scenario - An Insight

This is one thing which is all over the place...be in Newspapers, News Channels, Pink Papers and all...

Now i am gonna join the league of people talking about it...


Share Markets are driven on various factors some of which can be

• Company's Performance
• The PE Ratios
• The Global Scenario
• Trends in the Market
• Govt Policies

These are some of the main drivers of the Stock Markets. Assisting them was the so called "Great India Growth Story"...

Just 6 months ago, So called Market Experts and Analysts on all the Business Channels were talking about 6000 levels for Nifty and 25000 levels for the Sensex. Its not that they were just guessing to increase the level of confidence of investors in the markets and to increase the levels of TRPs of the Channels.

All these were calculated with a great deal of fundamental and technical analysis.

Then the question arises that what happened suddenly that the downfall happened in the markets and we are seeing the levels below 13K as on 1st June, 2008. People say that there is some kind of Economic Slowdown happening in the Developed Markets, Some say this is an after effect of the Sub-Prime Crises, There are many who say that the depreciation in the value od the US Dollar ($) is the cause of concern.

But the main factor remains that what happens to the small and medium investors who have invested their hard earned money into the markets @ levels around 18K or 19K....
Those people cite no logic of such drastic fall which have resulted in the corrosion of their wealth up to the levels of 50%....

The recent fall may be because of the understated reasons

1.FII's - Foreign Institutional Investors. They form quite a major share in the current market format and also drive the upward and the downward movement of the index. This thing gets support from the fact that the FII's accounted for 30% - 40% of the total market inflows into the markets in 2007. Now in the current scenario, there have been losses in tune of about 200Bn $ in the US alone because of the Sub Prime Crisis. So there has been profit booking from the side of the FII's since then only.

2.Rise in the Crude Prices all around the World - The crude has touched the levels of 143$ per barrel and this has resulted in the hike in the losses for the Retailing cos like IOC,BPCL and HPCL. There is a negative impact of this on the markets

3.Waiver of the Farm Loans by the Center Govt of 18Bn $ - This has impacted the Balance Sheets of the Banks straight away. Because 2009 being a poll year the UPA has tried to play the Pro Aam Admi Card which has affected the market sentiments in the negative way.

4.Inflation Touching 11.42% - With the inflation touching 11.42%, there is a rise in the costs for all sections of society and hampering the growth of the economy in a bad way.

5.Rise in Repo and PLR Rates by RBI - Citing the unprecedented growth in the Inflation, RBI acted by increasing the lending rates and the Repo rates which forced the banks to increase the interests rates at all levels. This again impacted the markets and expansion plans of many cos citing debt raising from the banks as an option for funding their expansions.

These are some of the main factors leading to the downfall in the share markets in the recent past 6 months. The Markets has been bullish since the year 2004 and it recorded a new high each and every time but since there are many factors now which have been functional enough to bring back the bears into the market!!....

But then also the world cant ignore the potentials of the Emerging Markets like India and China which are going to be the Power Economies of this 21st Century...