Tuesday, January 22, 2008

Indian sub-prime crisis in the making?

Stock markets have fallen, (for good) by about 25-30% in the last fortnight. Thats' still early days, we are yet to catch-up with the complete sell-off targets, that FIIs and the real movers of Indian markets have on their minds. It's quite obvious that the very liquidity that is hitting the markets is very much locked in the highly over-valued real estate market.

Unless this liquidity is unlocked, there is very to no hope in getting the liquidity back into the system.

However, it should be noted that unless people realize that fundamentally, when a miniscule apartment sells for 1/2 a million, its' time to leave either the city, or the markets.

Whenver the liquidity in real-estate is triggered, rest assured that Indian banks are gonna start announcing losses just like their US counterparts. Remember, even Indian banks have been dispensing 90% loans, even a 10-15% fall in real-estate might trigger an amazing real-estate crisis, rather a banking crisis, watch out, we are very close, and the ice is wafer thin ahead.

Dear FM, PM, et. al: Leave the Capital Market Alone

Why is Indian Government trying to bail out an super highly sold, unviable and unprofitable Capital Market?

Indian Government and the Finance Ministry need to answer this question, in the most candid manner possible. They owe it to the millions of people who do not have demat a/cs but still pay VAT, the millions of salaried class government employees earning a pittance while still paying income tax.

Why does the government want to lose the precious capital, and help FIIs earn far better returns instead of waiting for the deluge to be over. By constantly baby-sitting the stock markets, the government is encouraging callous investors. Why is LIC investing in bear markets, by using investor money, when they never pay more to policy holder on the back of a bull market.

Farmers kill themselves for the want of pity amounts, and the government turns a blind eye. Come FIIs in trouble, and greedy "investors" wanting support to book profits, the DIIs come in an bail them out.

Indian market is just that a creche for rich and HNIs, it is far far away from being a free and fair open market.

Monday, January 21, 2008

Black Monday - 21Jan2008

Indian Markets can excite you more than any reality show or sports t.v. ever can. Today was one such days, the numbers themselves probably spell disaster, however once you start imagining the carnage in the lives of those unfortunate ones who were highly leveraged in this bull market, it dawns on you as one of the biggest reality shows in the nation.

There were punters, horse-traders, and pure betters who were begining to take hold of Indian Markets, and would go home tonight to lick their wounds and perhaps with the knowledge that Indian Markets are just that, another set of emerging markets where mayhem and chaos rules roost.

Watching the action live as it unfolded was extremely exciting, but seeing 21-Jan being permanently etched in Indian Stock Market history was extremely satisfying too. For the record I lost about Rs. 5K held in ULIP, but I can afford to smile. Not many can.

The usual set of monkeys were freely making predictions about the future, and how the markets will bounce back. These shameless experts are only good at reading numbers that are past-tense, to even take their word about the future is foolhardy. Its' not surprise that Indian Markets crashed, after all, India isnt on Planet Jupiter, its' on terra-firma and every other nation can dictate the course in Indian Financials.

Valuations are now suddenly the flavour of discussion, however the "fundamentals" many take for granted are about to be questioned. No one in their sane mind would be able to predict the extent of US recession (if any) and its' impact on Indian markets, yet the euphoria doesnt abate.

Let's hope and pray that just like the stock markets, the real-estate markets would firmly head towards where it belongs. It's high time....