INDIAN CAPITAL MARKET IN 2008.....

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Market Review 2008

Year 2008 was the most eventful year for the capital market. The year that started on the bull note has lost their entire lustrous gain that they gained in 2007 .This was sparked by the subprime crisis and their ripple effects, bad economic news started from the USA and spread throughout the world and the effect was so cascading that they ruined the sentiments in capital markets globally and indexes of global market secularly crashed  more than 65%.  Any positive development, long term growth story, fundamental storey everything blown by bears that came in hurry.

GLOBAL DEVELOPMENT.

Global negative news flow started from subprime crisis of USA created biggest credit crunch since 1929 slowdown.Meny investment banks lost in the financial tsunami created by the subprime ghost.Euro zone was first who felt the cracks on GDP .Britain,germany france and other country significantly constricted significantly ,and officially went in recession ,the fall of walstreet  banks who has pronounced exposure in  equity worldwide has put there sell button and equity market globally collapsed.DOW legged in 2008 with 13264 and crumbled down to 7552 on 20 October 2008 ,NASDAQ 1764 in January 2008 cracked down to breached 900(885 day low) on 24 October ,FTSI 100 of London 6456 January 2008 crashed up to 3780 by November 2008.DAXof Germany Jan 08 Above 8000 in January gone down to 4127 by November 2008.CAC 40 of France was at 5600 in January and crashed down to 2881 by 21november 2008

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DOWJONES                                                                                                                      NASDAQ

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FTSE  UK

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DAX GERMANY

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CAC 40 FRANCE

Among Emerging markets asian  markets taken aggressive southward move HSI who were firmly holding 27800 in January ,came down to11000 on 27th of October, Chinese index who was hovering around 5500 in January corrected to 1700 level in October.NIKKEI 14700 to7600 taken a killer blow in selloff.

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Brazil Russia,Maxico corrected more than 50% ,many time trading stopped due to circuit filter bears were taken  complete control to the situation ,it was complete panic spread on indexes.

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INDIAN SCENAREO:

India was Emerging as one of the best investment destination for FII who raised huge pile of money from developed world especially from USA and Euro zone under the umbrella of BRIC fund, Emerging Market fund and even India dedicated fund. The high profile Hedge funds, investment bankers, big individual PE Investors found India as an investment heaven. India was about to achieve double digit growth rate.

Indian INC was on fundamentally sound wicket and aggressively spreading their wing on global horizon with acquisition and joint venture so market were making new high everyday by the end of the 2007 and first fortnight in 2008.

All of sudden things getting started to look gloomy crude started galloping towards north and reached up to 147$ a barrel in just one quarter, Inflation also get up into double digit, India INC started facing  effect of high credit rate, recession fear in USA and euro zone became evident ,under the threat of credit crunch FII press the sell button which led the complete sentiment damper for the equity market .At the same time political uncertainty at capital led further downward movement no news war there to rescue the market at that time. The mutual funds and DII was the net buyer but selling orders on bourses were wiped them then everybody looking for exit and market was under complete control of bears. Market shown some strength time to time but every strength aggressively sold by the market players. Entire fundamental news, growth and consumption storey gone with the financial Tsunami. The year will be remembered for best and worst both because index touches high of 6287 for nifty and 21200 for SENSEX  and low of 2524 for NIFTY and SENSEX also breached 8000 mark in same year. Market gained more than 60%in 2007 and lost its gain by October 2008.But when we look at individual script then picture is worst market came down with very heavey volumes. Reliance who touched 3200 in January came down to 900,Reliance capital the largest mutual company of the country came down to 400 from 2400,in real estate DLF 1200 to below 200,unitech 400 plus to less than 30,in infrastructure IVRCL 600 to 48,capital goods ,steel SAIL 280 TO 60.Airlince, jet 1200 to below 200.the wealth creators became wealth destroyer, India second largest bank who was quoting around 1400 cracked below 300,IFCI 122 to 15,the list is endless it was the product of huge selloff by FII who were liquidating there portfolio to meet the redemption pressure from there domestic client.

Although now it looks like that FII selling has absorbed  because in December FII are net buyers but until and unless big money won’t chase the market this market can’t see new high and the possibility is far distant because equity as a investor destination is at holiday for now. January is a crucial month to decide the market tone according to history rise in January always led the foundation of better market ahead but third quarter result looking challenging to the market to price the index. NIFTY and SENSEX ride looks bumpy because global market is yet to settle, then result season, stressful situation with Pakistan and parliamentary election are the events that will make the ride bumpy in the coming month. However  post may market will move secularly northward because by the end of first half the effect of stimulus package will be visible and more money will chase the equity .India will be at the brightest spot to attract the money because our growth storey is intact we are the least affected economy in the crisis when world is talking on recession we are still growing more than 7%.It is the universally accepted low in the long term the equity market is the best asset class to be in ,for Indian market this is the beginning not the end. this is the time to make long term portfolio not to sell, buy in dip an sell in rise a thumb rule followed by warren Buffet.

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