Taming of the BULL-Crash of 21 Jan 2008

Never did that , Czar

Here is fresh impetus to your brothers

Dow 12,208.23 -170.38 -1.38%

Nasdaq 2,334.51 -26.41 -1.12%

S&P 500 1,331.14 -20.93 -1.55%

Next week is big FNO expiry and people have two days to take stock of situation.

pankaj

well dow has not had a pullback after it started running from wednesday, lets see the extent of the pullback...

Could you please tell how price/volume indicates that crash is imminent... I'm new to TA... please help...

Hi

There are many who have criticised Bail out package meant for farmers.It is currently supposed to cost Rs 60000 crs and if scope is extended then few more bucks. Govt has provided 10000crs and another 15000 crs will be provided later. By June 2008 Banks should be ready with their claims meaning that farmers would not be proceeded against for default after that date and banks would raise claims to Govt to get reimbursement. Most of the agri loans to farmers are in NPA aleady and been provided for. It will release Farmers who would become again eligible to get loans from Banks.If this is done properly then it would provide stimulus to Agri Sector which is in crisis.

Rest of the money is not yet indicated by the Govt but hopefully it would come to banks in some ways. It would also result in cleaning up of their balance sheet.As of now bank stocks are beaten out of shape.Most of the public sector banks would have a good chance to recover and rally later (in second quarter of 2008)

The market has witnessed a drastic fall on Monday 17th and has breached 15500 around which 200 DMA zone falls. However if one were to remember market was already in sensitive zone since October 2007 when it was around 17K Since that time there were two corrections and market moved up drastically to hit 21K. That was only to woo the retail investors, I suppose. If it had corre3cted from 17K it should have come to somewhere near 12500 which was 200 DMA at that time. But market was propped up .

So if it does not consolidate around 15000( already below that level ) then it is ripe for correction up to 12500 level.

As of now I don't see much positive news flow. Elections(USA and India ) are looming large around the corner. That brings uncertainty which is not liked by traders/investors alike.

fed has reduced rates and is expected to reduce further to below 3 %. India has chosen no to reduce rates and that would attract money to take advantage of differential rates. This will strengthen rupee and weaken dollars. However liquidity would come if this money gets into market but my idea is that it would go to banks which in any case would lend to market.So Banks should have some advantage .

Now coming to another point about Market being bashed up by bears.It is true that Bears snatches honey from the comb. Honey which is collected by Bees so assiduously. True that comb is destroyed. But do bees stop building combs and stop collecting honey.. Does market move in one direction alone?If India were to be a fully developed economy then perhaps we would have been at the peak. Are we claiming that now there is no scope for development and we are economic superpower and we have to drift down from here in absence of any appreciable development? Its hardly 8 to 10 years that Indian Economy is being freed from the clutches of restrictions. its potential is yet to be fully realised.
So I don't think we would stagnate unless we chose to. And sooner or later Market will reflect this reality. When Market was at 8500 in 2006 how many of us thought it would cross insane heights of 21k Mostly we thought 12k-14k is alright for 2007. So we would be moving in right direction if we move up from here and scale 25000 later. by March 2009 and then correct during election.

I am quite optimistic and never thought 21K as sustainable in short term of one and half year that sensex took to achieve.However 25K from 17K is more plausible in one year and six months time.

Coming to the real provocation for writing this post. It was a News item by reuters titled " U.S. to start economic stimulus payments May 2"
I quote
I hope Chiddu is listening/reading.
The likely impact of this on US sentiments is yet to be assessed more so as it is election year for them and it could otherwise be disastrous for Republicans(pre election sop like farmers loan maaf) Here it goes directly to individuals who are likely to spend and give boost to economy /retail sales , avoid distress.

Pankaj

IN BUDGET 2009.....xpect bail out package for invstrs & traders.....

Someone we know relies on farming for a living. The problem they face is transportion and distribution of products to markets. The distribution is controlled by middle men who eat into most of the profits leaving the farmer without a safety net.

The government should be trying to invest in infrastructure projects to get the distribution going. India doesn't need fancy airports it needs infrastructure for the common man. India's IVY league bread finance chiefs should recognize this problem.

The other problem is too many independent farms. Plenty of 10-30 acre farms. These people are hard working and all they looking for is stable income. These guys are perfect candidates for manufacturing jobs but then again for some reason no one wants to bring manufacturing to India. It's almost like India feels that China is the manufacturing hub and are contended with status quo.

Coming to the airport thing, i Hyd,India a new airport is build and declared complete. it is very far from city. In other countries , till they provide some transport to the airport , it is not declared complete.

Infrastructure is very bad , and i don't see it improving any time soon. the problem with middle men is too bad, even to get a driving license , you have to go through middle men, the middle men problem will only disappear if large procurement co's come up in india just like other countries. it is showing difference where large companies like reliance are procuring , but 99.99 % places , middle men still rule.

Budget 2009 will be delayed and only be presented in June/July 2009 unless we have early elections. Else we will get only vote on account without any policy measures.We might also see grand spectacles in market ( but not like what we witnessed now as USA will be stable by that time )after election results whenever it happens.

Pankaj

Hi venkat

Problem on transportation and marketing in agri sector is only part of the problem.Main problem is that of Land reforms, land fragmentation, absentee landlordism, feudalism. Some of the problems are colonial legacy which are still not addressed. During British period three systems of Land ownership were instituted. Jamindari, Mahalwari and rayotwari system. Jamindari was mostly preventable in eastern India which encouraged absentee landlordism. Owners have no interest and some one else does the tilling. In other two cases either village or owners had direct interest. North India followed mahalwari system and south India followed rayotwari system. They have better agriculture. eastern india , despite being fertile, could not take advantage of green revolution among other factors due to this very system of land ownership.

Land productivity depends on size of holding and timely provision of inputs and irrigation( rain, canal, well borewell etc). Now all this require money. Without easy access to banks for money to meet their cost of inputs and also daily needs farmers can not produce as much as land is capable of.

In places like Punjab and Haryana farmers have taken advantage of all facilities including credit and have done well. Since their internal requirement is less most of their produce is marketed outside and they get better price. In other places lack of all these facilities and fragmentation have caused farmers to practice subsistence farming and often end up in debt and clutches of money landers who are also mostly intermediate income families.They meet day to day needs of farmers labourers. When this fails what else is there to depend on except to commit suicide. So this farm package will only scratch the problems since suicides are reported mostly in places where agri is not advances(not in Haryana/punjab) AP.WB, Maharashtra, Orrisa etc. However this package will give benefit to punjab and haryana as there farmers had easy access to banks.

So Govt must look beyond these measures and institute long term reforms.Self sufficiency in food is a must to retain independence.

Now coming to your infrastructure part, we do need them. Airports are needed and , as raosrinivas has correctly pointed out , poor planning reflects in not providing transportation facilities. Shortsighted approach to infrastructure will only result in chaos though something will come up in due course but till then passengers will be bhagwan bharose or middle men

pankaj

That package has created a head in the balance sheet for future govt. to you know what.