February 15, 2010 by akhilendra
Financial detonation
We are facing a huge financial detonation. Market is collapsing like anything, can’t even get a appropriate term to describe the condition. BSE is trading around 11400 & NSE around 3500. Sometime back, we thought that we have touched the bottom but the current trend in market is disastrous & it can go to any level. Global liquidity crisis is forcing foreign investor to pull out their money to generate cash for them.
First we saw market going below 15000 & now, even below 12000. In between many guesses about resistant at many levels but all broke. We are witnessing huge global financial crisis along with severe lack of confidence among investors. Government is giving assurance everyday but it is hardly having any positive impacts over the sentiments of retail investors. Though, Indian economical framework is very strong with strong fundamentals. But sometime market is driven by the sentiments, core sentiments of retail investors. A condition, where foreign investor are pulling out their money, doing selling at large scale, it lowers the confidence of a common investor who then run in panic & start booking losses which ultimately worsens the situation. Now, we have seen so much of it, that what seem to be best right now is to stay away of market.
Probably, this is a ideal time to sit back & plan our strategy. If one can afford to hold his current investment for next five years or someone looking for long term financial planning, this is the ideal time to enter the market. The worst & best part of current market is that it has cracked some of biggest name of Indian industry, very valuable large caps. In fact, few of the stocks are trading at their three years low. So, it is the best time to pick few blue chip shares which, in long run can yield big returns.
Governments & central banks should step in, as market is witnessing huge liquidity crisis, it is time to regulate & monitor the flow of money. Few of biggest global banks have already busted. Remaining is facing huge losses, due to these things there is chaos everywhere. Banks have become skeptical. They are not lending money to other institutions. If you sum liquidity crisis with strong selling, they are more than enough to deteriorate the situation.
We need to cautious but not frightened. If we take steps carefully, invest in big shares, we can surely fulfill our long term financial goals. Indian financial sector is still very intact & industry at large is well insulated from any crisis, as far as long term picture is concerned.
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