Indian Equity Investment Information and Ideas

The Stock Market is Always Right

noreply@blogger.com (iIndian) — Tue, 14 Oct 2008 04:29:00 +0000

Stocks.About

When the stock market is showing its volatility, whether predominately up or down, it is easy to offer reasons the market is wrong.

A number of pundits and predictors make a decent living telling investors why the market is too high or too low.

They proffer that the market is overbought or oversold for this obvious reason or that less obvious reason.

The impression is these sages can set the market straight and get it on the right track.

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Liquidity crisis: where has all the money gone?

noreply@blogger.com (iIndian) — Mon, 13 Oct 2008 13:24:00 +0000

Livemint

A one and a half percentage points cut in banks' cash ratio (CRR), which defines the amount of cash that commercial banks need to keep with the Reserve Bank of India (RBI), infused Rs60,000 crore into the liquidity-starved Indian financial system on Saturday.

There have been occasions in the past when CRR was cut by more than one and half a percentage points. For instance, in November 2001, it was cut by one and a three-quarter percentage points to 5.75% and in July 1974, the cut was even sharper—two percentage points, to 5%. But in its 73-year history, RBI has never announced a second round of CRR cut even before the first cut takes effect—something it did last week.

This shows the seriousness with which the Indian central bank is viewing the liquidity crisis. Till recently, the system had plenty of money. In fact, RBI had to raise CRR by one and a half percentage points in stages since April to drain excess money that was stoking inflation.

Where has all the money gone?

What is the root of the sudden liquidity crunch?

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NPS will become available to all early next year

noreply@blogger.com (iIndian) — Sun, 12 Oct 2008 12:47:00 +0000

The Financial Express :

Chairman, Pension Fund Regulatory and Development Authority (PFRDA), D. Swarup spoke to our correspondent about the benefits of NPS and affirmed that the scheme will become available to private citizens in five to six months, irrespective of the fate of the PFRDA Bill

How will the new pension scheme (NPS) benefit a potential subscriber when compared with existing products?

Basically, there are three features that make the NPS different from the various plans available today. One is portability. A subscriber will be given a unique account number, something on the lines of a PAN. With that number he will be able to transfer his account across jobs and geographical locations. At present, with a new job a person has to create a new account and close the old one. So it's a seamless account that remains with you for your entire saving life.

The second unique aspect is cost effectiveness — both in terms of fund management charge and load structure. There is no entry or exit load. The cost of management is quite low, ranging from 3 to 5 basis points (0.03 to 0.05 per cent).

The third aspect is flexibility. A subscriber will have the freedom to choose the fund manager and investment options. A menu of options, say, four to five, will be available.

Moreover, at the moment we have three fund managers. But once we open up the scheme to private sector citizens, we will appoint more fund managers. So far, we haven't decided on a number yet, but we will definitely have more

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India economy will continue to perform well: IMF

noreply@blogger.com (iIndian) — Sun, 12 Oct 2008 12:15:00 +0000

Livemint

Washington: Dismissing fears of global financial contagion impacting India, the International Monetary Fund or IMF has said that the country's economy will continue to perform well.

"Overall, we see the Indian economy continuing to perform well," said Oliver Blanchard, Economic Counselor and Director of International Monetary Fund Research Department recently.

Pointing out there will be some impact of the tighter global liquidity conditions on India, he said, "We don't see major drag from this impact on the country."

According to the projections made by the World Economic Outlook (WEO) released recently by the IMF, India is likely to register a Gross Domestic Product (GDP) growth of 7.9% in 2008-09, which may slip to 6.9% in 2009-10.

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Inflation at single digits in Q4: Economists

noreply@blogger.com (iIndian) — Sun, 12 Oct 2008 12:14:00 +0000

Livemint

Mumbai: Economists see inflation dipping below the psychological 10% level by end-December and falling further to hover around the 7-8% mark by March next year.

However, notwithstanding the declining trend being witnessed presently, they warn that inflationary pressures still exist in the economy and the Reserve Bank would continue targeting inflation in the medium-term.

"I see inflation at sub-10% levels by end-December or January. Going by present trends, it should be in single digits in Q4 FY'09," Bank of Baroda (BoB) Chief Economist Rupa Rege Nitsure said.

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'Right time for overseas Indians to invest in India'

noreply@blogger.com (iIndian) — Sat, 11 Oct 2008 17:24:00 +0000

DNA Money

DUBAI: Overseas Indians should take advantage of favourable exchange rates arising out of the current global financial crisis and invest in India, says M Venugopal, CEO and managing director of India's Federal Bank.

"I will ask NRIs (non-resident Indians) to take advantage of the current situation of high exchange rates and interest rates," Venugopalan said in Qatar.

Venugopalan, who is on a tour of the Gulf, said that banks in India were safer in the face of the global credit crunch as these had "insignificant" exposure to the US markets and did not have a large presence of structured products, which had compounded the crisis in the West.

It was advisable to invest in non-resident ordinary (NRO) deposits or relatives' domestic deposits as rates were higher now, the Gulf Times quoted him as saying.

The rupee has fallen to over 48 levels against the dollar as foreign institutional investors took out money from the Indian stock markets in the face of the crisis.

According to Venugopalan, at present NRO deposits of less than one year fetched an annual interest of 10.6 percent and those of less than three years got 10.5 percent, while non-resident external (NRE) savings deposits earned only a little over four percent.

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Financial Crash and TV Media Machines Perpetual Buy Recommendations

noreply@blogger.com (iIndian) — Sat, 11 Oct 2008 13:42:00 +0000

The Market Oracle | 11-10-2008

Maybe there's a good reason why CNBC has a show called Fast Money. If you follow the advice of these guys, your money is likely to evaporate very fast. Likewise, I'm beginning to see why Cramer's show is called Mad Money. You're likely to get mad if you follow his advice. Or maybe you have to be a mad man to watch it.

Is it just me, or do these guys look evil? "Watch TV, Get Rich?" In my opinion, that claim is in violation of SEC rules, not to mention that fact that it's a complete lie. In fact, the opposite is true… "Watch TV, Become Poor." The only people getting rich when YOU watch TV are those behind CNBC, including the sponsors. Of course most of the shows on CNBC have the token "babe" there to offset some of the testosterone overload.

Do yourself a favor. Pick up the phone and call the SEC. Demand they remove this stock pumping network from the airwaves. If the SEC was doing its job, it would have shut CNBC down long ago and sent the stock manipulators to prison. Understand this. The SEC is partners with Wall Street just like the FDA is partners with big pharma. These government agencies aren't protecting you. http://www.reuters.com..

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In the race between greed and stupidity, the latter always wins

noreply@blogger.com (iIndian) — Sat, 11 Oct 2008 13:03:00 +0000

Equitymaster

The call to conquer fear in last week's column turned out to be rather premature, as global stock markets continued to collapse under the weight of it. Investors cared two hoots for the $ 700 b. bail out package, and two more hoots for the efforts of central bankers around the world to inject more liquidity by cutting interest rates half a %. Since this column is being written with one's foot firmly in the mouth, I would shortly need the services of either a dentist or a pedicurist, depending on how long it would take for the rally to ensue.

The mess in the global financial system is deeper and more widespread, which is what led Kenichi Ohmae to opine that the financial hoover needed to clean it up would be at least $ 5 trillion and not $700 b. This makes the facetious comment of the Hunt brothers, who lost a family fortune in silver speculation, that 'a billion ain't what it used to be' seem prophetically mild. Nowadays a trillion ain't what it used to be, in the hands of foolish commercial and investment bankers more concerned over their bonuses than their fiduciary responsibility of managing other people's money!

Consider just one derivative market, that of credit default swaps (CDS) which has grown from nothing to $ 60 trillion (4 times US GDP for chrissake!) in ten years. A credit default swap (the instrument exposure to which brought down AIG) is like an insurance on a mortgage bond. Armed with such insurance issuers of mortgage bonds were able to proliferate them. An article " The $55 trillion question" in Fortune how some of these deals were done – e.g. over a 1 minute phone conversation or an instant message!!! The deals were contracts, not insurance or securities, and hence unregulated! People could enter into a CDS contract with no interest in the asset they were betting on. So this was a market created for any product, with no regulatory oversight, done on the phone or through IM in a minute; in short a recipe for disaster! And venerated institutions did such deals! The unwinding of these deals can have unknown impact. To put it in perspective, a mere 1% default would swallow $ 550 b. of the $700 b. Paulson has.

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FII selling cannot continue for long

noreply@blogger.com (iIndian) — Fri, 10 Oct 2008 17:52:00 +0000

Business Standard

This is the best time to buy equities, but retail investors should also keep some cash with them
-Vallabh Bhansali
Chairman, Enam group

Why are foreign institutional investors (FIIs) selling heavily, which has resulted in the gains of the last two years being washed away?
First, let us understand that FIIs are not selling because they think that the India story is not good. They are selling because they are either facing or anticipating redemptions (in their home markets).

Do you think there is further scope for FII selling, or is it almost over?
How long they will sell will depend on their need for money. But one thing is for sure. In the absence of buying, this kind of selling cannot continue for long. When there is no buying, prices fall, thereby negating any gains.

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The ‘Developed’ country

noreply@blogger.com (iIndian) — Fri, 10 Oct 2008 12:44:00 +0000

Equitymaster

In the list of 'developed nations' of the world, the US is considered to be at the top. The metrics that are used to qualify the US as a developed country are many. But the country has worked long and hard over a span of many years to attain the top slot in one such criterion. It has truly 'developed' its debt levels to an extent that the country itself had not imagined. What a fabulous success story!

With the ongoing subprime mess in the US, this particular criterion has come into the spotlight. In what can be viewed as a dramatic representation of this, the National Debt Clock in New York has run out of digits! It can no longer display the figure of the national debt of US, defeating the sole purpose it was made for. The electronic billboard hit its limit of $9,999,999,999,999 after US public debt rose above the US$ 10 trillion mark for the first time on September 30. As a temporary fix the dollar sign in $10 trillion has been switched to the '1' to accommodate the figure.

The clock, located in Times Square in New York, shows the amount of money owed by the US government (now US$ 10.2 trillion). The late Manhattan real estate developer Seymour Durst put the sign up in 1989 to draw attention to what was then a US$ 2.7 trillion of debt.

The Durst organization says it plans to update the sign next year by adding two digits.
That will make it capable of tracking debt up to a quadrillion dollars. Bravo!!

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The world needs a Maradona

In this issue:
» After Wall Street, who next?
» The 'Developed' country
» RBI slashes the CRR
» 'Hoard' mentality
» ...and more!

Merrill Lynch puts 'buy' on Reliance Industry

noreply@blogger.com (iIndian) — Fri, 10 Oct 2008 11:42:00 +0000

Economic Times

Reliance Industry
CMP : Rs 1,649.60
Target price: Rs 2,910

Merrill Lynch has retained its "buy" rating on the stock, saying it expects the 2-year earnings per share (EPS) CAGR in FY08-FY10E to be 40%. "RIL has one of the strongest earnings growth in our global universe.

KG D6 oil and gas and RPL refinery will be main earnings drivers. RIL's valuation is compelling now at 8.5 times on FY10E EPS and PEG of 0.21 times," said Merrill Lynch in a note to its clients.

According to Merrill Lynch, positive news flow on exploration and production (E&P) in terms of discoveries and reserves accretion is likely to continue for the company. "RIL is scheduled to drill in at least three highly prospective blocks (KG D6, KG D9 and Mahanadi D4) in the next 12 months," said the Merrill note.

The firm expects strong growth prospects for RIL beyond FY10E (estimated), too. "We believe prospects beyond FY10E will be driven by two large petrochemical projects, rise in gas reserves and production, organised retail and SEZ," the note said.

Some main risks for the company, said the note, also appear to be receding. "There are indications that some of the main risks like no tax holiday for gas production and windfall tax are receding," the Merrill note added.

Original article.

Buy when there’s blood on the street

noreply@blogger.com (iIndian) — Fri, 10 Oct 2008 11:40:00 +0000

DNA Money

The current fall is an excellent opportunity for long-term investors to build up a portfolio of good, stable stocks

Investors of all classes have been badly scarred by the fall in stock markets, so much so that some have terminated investments in SIPS (systematic investment plans) and got into conservative FMPs (fixed maturity plans). This seems to be a classical case of disillusionment of investors with stocks in general — where people feel that as far as equity is concerned, there is no tomorrow.

At this low point in investor confidence, I would stick my neck out and venture to advise long-term investors that the current fall is an excellent opportunity to build up a portfolio of good stable companies at bargain basement valuations.

Although stocks seem to be a four-letter word today, I feel that, five years down the line, people would rue this missed opportunity, wondering what made them pass up on these values. Investors would do well to remember that the greatest gains were made by those who invested in markets at the depth of the 2003 lows, when the clouds of gloom were at their darkest, and not by those who invested when the sun was shining at its brightest in 2007.

Cast your mind back to the market crash of 1992 or the dotcom bust of 2000. At that time, these seemed to be major crises for stock markets. But if we look at the historical chart of the Sensex versus time today, they appear to be minor blips in an otherwise upward trending graph.

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Worst weekly performance for Sensex, Nifty ever

noreply@blogger.com (iIndian) — Fri, 10 Oct 2008 11:33:00 +0000

Moneycontrol

Markets have completely shattered and washed out on account of scary global cues and weak IIP data despite RBI has taken initiative to inject around Rs 60,000 crore liquidity in the banking system in the form of cutting CRR by 150 bps. This has been the fifth consecutive day that the markets closed on a weaker note. However, comments from Finance Minister and Sebi Chief has helped markets a bit.

Metal, realty, capital goods, power, banking, and oil stocks have hammered severely. Midcap and small cap stocks took huge beating on the bourses as well.

In early trade as well as in late trade, it was looking like the Sensex would hit lower circuit, but fortunately, it did not happen. Lower circuit for the Sensex was fixed at 1275 points and for the Nifty at 390 points. The Sensex tumbled 1088.6 points and the Nifty fell 314.7 points in an intraday trade to hit a low of 10,239.76 and 3198.95, respectively.

The Sensex closed with a loss of 800.51 points or 7.07% at 10,527.85. The Nifty lost 233.7 points or 6.65%, to settle at 3279.95. BSE Midcap slipped 334.48 points or 8.34% at 3,676 and the Small Cap index was down by 343.74 points or 7.31% at 4,355.45.

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RBI cuts CRR by 150 bps, adding some 60k cr in liquidity!

noreply@blogger.com (iIndian) — Fri, 10 Oct 2008 11:30:00 +0000

Moneycontrol

In an anticipated move, the Reserve Bank of India, or RBI, has cut the cash reserve ratio, or CRR, by 150 basis points to 7.5% with effect from tomorrow in a bid to infuse liquidity into the markets.

On October 6, the RBI had cut the CRR by 50 bps to 8.5%. Today's 150-bps cut includes October 11's cut. The cut will inject liquidity into the system to the tune of Rs 60,000 crore.

Nilesh Shah of Envision Capital said, "The CRR cut is definitely a positive move, which is going to soothe some liquidity fears. The stock market also needs liquidity and this (the rate cut) will help to some extent. Whether this is going to help us beyond a day or beyond an intra-day basis is something that remains to be seen."

"Directionally, the CRR cut is a positive move that helps the banking system, helps the overall economy and will probably help the market in short-term or intra-day," Shah added.

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Cargo shipping rates to Europe fall 40%

noreply@blogger.com (iIndian) — Fri, 10 Oct 2008 11:15:00 +0000

Bangalore: The cost of moving cargo containers from India to Europe has plunged by nearly 40% in the past one month as the global economic downturn begins to slow demand for goods to the continent.

Shipping rates have fallen to $650-700 (Rs31,655-34,090) for a standard cargo container, from about $1,050-1,100 till August.

"The situation every year in October is that cargo wait(s) for ships... This year, ships are waiting for cargo," said the India head of a European container shipping firm, who did not want to be named as company policy does not allow him to speak to the media. "Ships sailing to European destinations are not going full…the capacity utilization is less than 80%."

Exporters in India were shipping an average 12,000 standard containers a week to customers in Europe between January 2007 and August 2008, accounting for nearly 18% of the country's total exports.

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India to spur world GDP growth

noreply@blogger.com (iIndian) — Fri, 10 Oct 2008 11:10:00 +0000

Livemint

The International Monetary Fund's (IMF) latest World Economic Outlook sharply reduces its forecast for world gross domestic product (GDP) growth to 3% in 2009, whittling it down from the 3.76% predicted in April. A global GDP growth rate of 4.21% is now forecast for 2010, compared with 4.76% earlier.

The report says the current crisis is "the most dangerous shock in mature financial markets since the 1930s". It's difficult to see how that squares with the 3% growth rate in world GDP forecast for next year.

In 2001, after the technology bust, the global economy grew by a mere 2.2%. During the recession of the early 1990s, global GDP growth was 1.45% in 1991,

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Trouble ahead? Top bank borrows Rs1,000 cr @ 20%

noreply@blogger.com (iIndian) — Fri, 10 Oct 2008 11:06:00 +0000

Livemint

A large Indian commercial bank borrowed Rs1,000 crore from another major domestic bank at more than 20% interest rate earlier this week, a desperate move that underscores the gravity of the liquidity scarcity for some Indian banks, notwithstanding assurances to the contrary by regulators and politicians alike.

The short-term money was raised through certificates of deposits, or CDs, essentially a promissory note that bears a maturity date and a specified fixed interest rate.

It appears that this is the highest interest rate charged by any Indian bank on a 45-day loan given to another bank since the mid-1990s, when liquidity was scarce and interest rates soared, following a tight monetary policy by the central bank against what was then a backdrop of rising inflation.

This time around, the root of the problem is global liquidity crunch and banks' sudden and growing aversion to lend to each other as the general confidence level in the banking system has declined sharply in the past one month.

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Pockets Of Prosperity

noreply@blogger.com (iIndian) — Thu, 09 Oct 2008 16:00:00 +0000

Forbes

You can barely hear it over the high-pitched screams on the trading floor and the sharp recriminations on Capitol Hill. But it's still there, the steady hum of the other economy--the nonfinancial sector, that is. This is the Middle America of businesses that produce rather than trade. They are struggling yet chugging ahead.

Yes, every day brings a fresh reminder of the troubles we're in: an all but complete freeze of credit, a house price collapse that has at least another year to run, a sickening drop in factory orders, a scary spike in unemployment claims, the wild downward lurches in the markets, the collapse of another financial titan--or another rescue by Uncle Sam or Uncle Warren.

But there's still plenty of life out there--solid companies, large and small, that are sitting on cash, digging for new opportunities in the downturn, adding to their workforce. A few bright spots in a vast, dark landscape.

Read which are the Pockets of Prosperity.

The Biggest and Smallest Banks Will Remake Banking Landscape : Kiplinger

noreply@blogger.com (iIndian) — Thu, 09 Oct 2008 15:50:00 +0000

Forbes

Small community banks will race to protect their turf and fight for new customers in the remade financial services landscape. What the smaller players must contend with are the biggest banks, competing for their customer savings deposits.

"For years there has been speculation that financial services were becoming a barbell with a heavy number of large and small banks," says William McCracken, chief executive at Synergistics Research. "Now that trend has accelerated."

Investor panic is speeding up a decades-long consolidation in the financial services industry. There are about 8,500 banks -- down from 17,000 in 1988. As their stock prices swooned, the investment banking giants disappeared -- merging, buying or being bought by the three universal banking giants that now hold almost a third of U.S. deposits: Citigroup, Bank of America and JPMorgan Chase.

The consolidation is far from over. Regional midsize banks with assets of $10 billion to $50 billion are attractive targets for these banking behemoths. As fear continues to drive investors to pull their money out of financial stocks, even healthy banks will have to put their assets up for sale rather than fail.

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Bottom Falls Out In Tokyo : Forbes

noreply@blogger.com (iIndian) — Wed, 08 Oct 2008 15:50:00 +0000

Forbes

HONG KONG -Investors ran for the exits in Tokyo on Wednesday, with the Nikkei 225 plunging 9.4% on fear over the health of Japan's exporters and forced selling to cover losses.

Other major Asian stock markets tumbled 4% to 6%, as concern over the widening Western banking crisis and slowing economies outweighed actions by the central banks of Japan and Australia and the Hong Kong Monetary Authority to ease the credit squeeze.

In Japan, the benchmark index dropped the most in 21 years as investors were chilled by a report in the Nikkei business daily based on unnamed sources that asserted that Toyota's profit was likely to fall around 40% in the year to next March on weak sales in the key North American market and slower growth in China--far worse than the automaker's previous forecast.

With investors liquidating losing positions throughout Asia funded by yen borrowing, the Japanese currency strengthened to 99.96 against the dollar, eroding the value of overseas sales for exporters.

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What’s causing the commodity crash?

noreply@blogger.com (iIndian) — Wed, 08 Oct 2008 15:46:00 +0000

After stocks and bonds, it's time to say goodbye to the heydays of commodities. As was recently reported by Bloomberg, commodities markets are heading for their biggest annual decline since 2001.

Throughout 2007, commodities were in what they called a 'super-cycle' that pushed their prices to record levels. Some commodities in fact leapt higher than the fundamentals merited. For instance, crude oil surged almost 45% and agricultural-commodities like wheat doubled.

Metals also performed strongly, driven by consumer demand as well as a global construction boom. Copper prices, for example, quadrupled during the period 2002 to 2007.

But expectations for a recession in the US and an economic slowdown worldwide are now hitting the commodities market. Oil is already down 39% from its peak attained in July. Metals have corrected sharply and are expected to go down further as well.

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On the edge : by Ajit Dayal

noreply@blogger.com (iIndian) — Wed, 08 Oct 2008 15:42:00 +0000

Equitymaster

How close to the edge are we? Given another terrible day for stocks in the US on Tuesday, October 7th, we must be at the edge. According to the Bloomberg news story, "the S&P 500 slid 60.66 points, or 5.7 percent, to 996.23, extending its 2008 tumble to 32 percent in the market's worst yearly slump since 1937. The Dow Jones Industrial Average dropped 508.39, or 5.1 percent, to 9,447.11, giving it a 29 percent retreat in 2008 that would also be the worst in 71 years. The Nasdaq Composite Index lost 5.8 percent to 1,754.88."

We have seen financial panics before.
We have seen wealth evaporate before.
In 1987, the Dow Jones Industrial Average crashed from 2,641 on October 2nd to 1,739 on October 15th. That was a decline of -52%.In 2 weeks.
In 1998, the Dow Jones crashed from 9,338 on July 17th to 7,539 on August 31st.
That was a decline of -24%. In 6 weeks.
The current decline in the Dow is -49% from its peak of 14,093 established on October, 12, 2007. In 51 weeks.
If things are bad now, they were also pretty bad in 1987 and 1998 yet we survived as a species.

Extract from the article (read the full article)

ARCHIVES OF HONEST TRUST - ARTICLES FROM AJIT DAAYAL

Thinking ahead for growth

noreply@blogger.com (iIndian) — Wed, 08 Oct 2008 13:29:00 +0000

The convergence of the subprime crisis and the ensuing credit crunch, uncertainty about inflation and a slowdown in the US and Europe have given rise to a high degree of uncertainty about the short-term outlook for economic growth. However, as a recent report by the Global Risk Network of the World Economic Forum, Global Growth@Risk, highlights, leaders from all walks of life and particularly those heading growing companies, should also be looking beyond immediate problems. The report finds that the world may seem a very divided place today as some economies experience unprecedented growth while others appear to be drifting into the doldrums.

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Half the stocks going below book value

noreply@blogger.com (iIndian) — Mon, 06 Oct 2008 13:18:00 +0000

Economics Times

With the markets seeing consistent selling by overseas investors and the benchmark indices taking a tumble, many stocks have retreated, and are now quoting below their book value. A study by FE indicates that as many as 49% stocks from the 2,699 listed companies traded below their book value at the end of September, sharply down from the 22% on January 8, this year.

And this is not just about a large sample size, including many trashy companies and penny stocks. Around 7% companies on the BSE 500 were quoting below their book value in January and now the share has swollen to 20%. Clearly, the pounding has been severe as the Sensex has fallen by 38.39% (-8,012.90 points) to 12,860.43 on September 30, from the peak of 20,873.33 on January 8,2008.

Out of 2,699 quoted companies, 1,319(49%) quoted below of their book value as on Sep 30. But on January 8, the number was 584 (22%).

Among the 1,319 companies quoting below their book value as on Sept 30, a few are big companies. Take for example, Arvind Ltd, which was quoting at around Rs 24.30 with its book value pegged at around Rs 63.55. Even the leading tyre manufacturer of the RP Goenka group, CEAT was quoted at around Rs 60.10, while its book value was around Rs 145.97. Then, there are others like Century Enka (Rs 94.15/BV Rs 225.14) and Escorts (Rs 59.10/BV Rs 80.75).

Read the full article.

Time to conquer fear

noreply@blogger.com (iIndian) — Mon, 06 Oct 2008 11:55:00 +0000

Investing is primarily all about conquering two primal emotions, greed and fear. The time to conquer the former was in January, when the BSE sensex hit its all time high of 21,206. The time, at least for the moment, to conquer fear, may well be now, when it is at 12,526. With the US Congress having approved the $700 b. bailout package and it having been signed into law by the President, global stockmarket should be expected to rally next week. How long the money lasts in a financial system that is more riddled with holes than Swiss cheese, is anybody's guess but it should last awhile. If the expected rally fizzles away swiftly, it would be a sign that investors think much worse is ahead (it is) much sooner than later. Then my next column would take longer to write; it is difficult to type with a foot in the mouth!

It seems insensitive to term the package as a bailout package, a term usually associated with passengers parachuting off a crashing aircraft. Sadly, the golden parachutes are the preserve of top management that led the institutions into failure and not of those who suffer the consequences. What investors need to figure out is whether the package would be enough or whether there is worse news to come. For that one needs to understand the root of the malaise in the US financial system and if the things that created the problems at the root would change.

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