The Indian Stock Market index SENSEX tumbled 826 points or 6.77% in the worst ever correction (in point terms) since 1992 prompted by a slew of international events, ill-informed reporting, Foreign Institutional Investor (FII) selling, and Government fumbles. By some estimates, the drop wiped out USD 69 billion in paper profits.
Several international events such as inflationary worries, interest rate hikes,
global imbalances in trade, and oil price instabilities created a correction in the Indian market specifically the metals and materials sectors.
Finance Minister P. Chidambaram said that some papers have been reporting ill-informed information that the Government will tax FII as traders causing serious doubts among foreign investors about India’s economic reform policies. Calling this crisis “manufactured,” he said that some correction due to international events is necessary but not to this level.
Cement stocks which were on a bullish trend only two weeks ago took a bearish turn following Commerce and Industries Minister Kamal Nath’s statement saying that the
Government may ban exports or import taxes on cement exports. This one ill-advised statement took the cement sector stocks to task even though the fundamentals are solid.
In the final analysis, the increased exposure to stocks is bound to increase stakes and panic in investors. Ultimately, the fundamentals for India are really solid.
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India can easily post a
8% growth
rate
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India is the world’s
4th Gross Domestic Product growth engine
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India is the world’s
largest telecom (especially mobile) growth engine
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India is expected to
surpass China despite the chaotic surface
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India’s trade is spreading multiple ways and bilateral
trade with China is soon to eclipse that with US