Gives Information about stock movements in Bombay stock Exchange(BseIndia) Bse ,National Stock Exchange (NseIndia Nse) and stock market tips.
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Monday, October 8, 2007
Why Indian stocks will crash in October?
Most of the investors and analysts are unable to cope with this
unbelievable rise in Indian stocks especially capital goods and power
stocks. Foreign investors and big financial institutions invested
heavily in these stocks when markets were crashed in August but many
retail investors missed to capitalize this rally. FIIs discounted all
the negative news and poured money into Indian stocks after Fed rate
cut in September. But will this euphoria last forever?
Why Indian stock markets will crash in October?
1. Political Instability: This is the single most major reason for
stock market crash. Investors especially FIIs never like political
instability and they will book profits and go to another country. Even
though political turmoil will have no significant impact on the growth
of companies, stock markets always negatively respond to political
instability.
2. RBI decision: Don't expect positive news from RBI. Don't be fooled
by inflation data which is released on every Friday. You will know
real inflation in the routine life. No government will allow raising
inflation by cutting interest rate cut just before elections. RBI will
definitely raise CRR and is major negative news for markets.
3. Negative news: When markets rose too high within a short span,
single negative news will create havoc in stock markets. Markets
discounted negative news like Crude rise, rupee appreciation,
inflation concerns in U.S after fed rate cut and slow down in economic
growth etc. How long investors will discount all these negative news?
4. Government policies: If mid-term polls are inevitable, Government
prefers people over companies. Popular policies will slow down
momentum which will negatively impact investors sentiment towards
India.
5. Foreign Investors (FIIs): FIIs were major culprits for August crash
and are going to be responsible for October crash. Just see and learn
how they are cashing money from every rise?
6. Economic growth: There is a slow down in economic growth if you see
the data but markets already discounted 2008-09 earnings especially
for high growth sectors like power and capital goods.
7. Profit booking: Shrewd investor always book profits just before
every crash whether it is in 2000 or 2006. Greedy investors always
lose money in every crash. Decide yourself whether you are greedy or
not?
8. US markets: US fed rate cut created euphoria among investors but
this will actually show negative impact on the long term on credit
crisis. It treated chronic disease in acute manner. Instead of curing
root causes of credit concerns, it went in superficial manner which
will cause inflation pressure in America and severely impact economy.
Stock markets will continue to surprise us as they no longer represent
a country's economy. Markets are in the grip of few investors who can
manipulate stock prices according to their will. Why Reliance rose
above 2,400, can anyone explain me? Can anyone explain me the changes
in Indian economy from August to September?
Closely watch Q2 results and movements of political parties and take a
quick decision. This exceptional rise is no way responsible to economy
and next crash will not be due to economy. It is better for retail
investors to book profits and watch the unfolding scenes to enter the
next rally. But I still believe in long term Indian story but not
Foreign investors.
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