Eye of the storm

IN THE EYE OF THE STORM

Recent upswings we saw in our market are mainly due to the huge amount flowing to India especially from US by way of FII’s. It has been the result of the returns rather, more value for money, which must have been the reasons for the flow even after SEBI’s tightening of screws. Earlier lessons tell us that it may be a ploy of the powerful and bullish elements from abroad. American economists, has managed after their great depression periods during 1930s to dump the shocks and setbacks of their economy on others’ shoulders. Looking back what happened to the Asian markets just before the fall in late nineties is somewhat similar. Asian countries led by Japan and Korea took the brunt of the fall and it must have taken them years to come out of their mess.

Likewise, USA is now on the verge of an economic crisis and very badly wants to shove the burden on other countries so as to save their economy from the brink of a disaster.
Federal Reserve equaling to our RBI had to pump in 40 billion dollars to bail out Citibank corp. from the sub prime crisis. One can see the amount pumped in, which itself is huge and one gets the feeling, as only the tip of the iceberg. Like a person about to drawn is tending to take others’ neck as well in a frantic effort to survive. We have to be vary of the fund flow which when withdrawn all on a sudden may have a huge impact on our market. SEBI should be watching out for the source of the funds and must ensure that our market is saved, if in case it is a part of a larger scheme. The correction drop has to be gradual and should be considering buffer funds to insulate and take care of any eventuality.

We cannot allow our people to suffer for the blunders committed by others. At the end of such phases have seen ultimately the common average people suffering the most as the rich always can fall back on alternate arrangements.

There was this incident which happened in my younger days, in the late eighties when there was a publicity stunt of ‘double your money scheme’ and people were assured of double the amount they invest in a couple of weeks time. Initial weeks saw them actually making the payment of double amount thereby attracting more investments. Then people started to run berserk and rushed in to make double profit only in two weeks, queuing up to remit and those who were paid double, re- invested double the amount till sometime and when the fund became huge the promoters disappeared, leaving all those hapless people who, fell for the trap, dry and empty. The present Bull Run in the market reminds me of that happening and wanted to suggest investors in shares only to the limit of ten to twenty percent of their savings thereby limiting risk exposure to manageable limit.

How ever, our country is so huge in terms of fundamentals and basically can withstand any setback in the near future, purely for the reason that with over a billion people and mainly skilled man power who is virtually running the show all around the world and with the best brains among contemporary races can also absorb ambushes, without much of a problem. Hence, there is no need of panic reactions and may feel assured of the abilities of our government led by Sri. Manmohan singh who himself is a genius.

M.Balakrishnan,
16 A III Layout, Meena Estate,
Sowripalayam P.O, Coimbatore-641 028.
Phone 0422 2310637
Cell 9894474174,