World of India!

The Sensex tanked 368 points today. That’s a 3% fall in a day. Indian markets have become very volatile these days and such swings have are becoming more and more common. Even so, the severity of today’s fall seemed to take all and sundry by surprise. More so, because the reason for the sell off is not immediately apparent.

Analysts tried to explain the fall, but frankly not one had a good explanation. Fine, the US economy is slowing down and that might lead to China slowing down, which in turn would affect the commodity prices downwards. But India is still relatively less dependent in the US economy plus the fact that commodity related companies do not constitute a very big part of the sensex . And with Crude coming down from above 70$ levels to below 66$ per barrel, that should be good news for an energy hungry country likes ours. But apparently somebody doesn't share these sentiments and sold the market, anyways. Some analysts argued that since the market had risen form 9000 levels to 12000 on the Sensex, in the last few months after June -July, this fall is only natural, but even then a fall of 3 % in a day? I say that's overdoing it a bit.

Some people speculated that this might be the psychological impact of 9/11's 5th anniversary and also a reaction to the Malegaon bomb blasts on Friday. I am not convinced, but you know what, people need some reason to understand WHY the market fell by such a wide margin, for no apparent reason. So as long as they get some reason to clutch to, they are fine. So who am I to grudge them that?

Luckily I had sold a third of my trading positions on Friday and a bulk of rest of the stocks I own are blue chips and will, hopefully, get through this carnage. But I shudder to think what must have happened to some other short term traders with leveraged positions, who took the bet that the market would continue its rise above 12000.

But that’s how the cookie crumbles in this game. I am reminded of Abba's lyrics from the song 'The winner takes it all...":

".....Ive played all my cards
And thats what youve done too
Nothing more to say
No more ace to play

The winner takes it all
The loser standing small
Beside the victory
Thats her destiny"

P.S: Such huge falls for little rhyme n reason are usually followed by a steep rise the next day. It might just happen that the market rises 100 odd points tomorrow. And yes, buy Infosys if it falls below Rs1700-1720/-