A week back the world would not have expected that two of the biggest names of the Wall Street would disappear overnight. It was heartbreaking to see Lehman Brothers trade at 21 cents yesterday and Merrill Lynch being sold to BoA for $40 billion. Amidst all this, there were signs of more companies lining up and facing the barrel of the gun. Washington Mutual saw its stock hit bad and AIG got eroded by more than 50% and sought a relief package of $4o billion.In a previous post titled :"9 Big Whales - What went wrong with them?", I had mentioned that Richard Fuld was amongst the 9 CEOs who are likely to disappear by the end of 2008. Now, I hope for the best but signals being sent by AIG, UBS and Citibank don't seem positive. The last thing the world needed was for Goldman Sachs to come out and declare a fall in profits by 71%. The Fed has already decided to pump $50 billion into the financial system to try and stabilize the market and a few of the remaining investment giants at Wall Street have come together to form a contingency fund of $70 billion.
The short term outlook for US markets is negative and the coming quarter results for most Indian IT companies are expected to be disappointing. What is acting as an anchor for Indian markets is the fact that even after such a huge turmoil, the Sensex and Nifty both remained flat today. In days to come, I will have my eyes on AIG, UBS and Citibank.
2 comments:
Hey Rahul, I guess I didnt understand how is India resilient according to you?
Is it just the Nifty and Sensex remaining flat?
How do you explain the rupee falling vs. the dollar?
the fall in rupee is a temporary phenomenon. Dollar is expected to get weaker in weeks to come and Fed had left interest rates unchanged. Experts had expected a 12-14% correction for Sensex but a 280 point fall is moderate as per me, keeping in mind the bloodbath in Nasdaq and Dow.
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