subprime

We did mention earlier that the entire structure of the World Economy is changing and this change has brought about a high impact casualty. The US investment bank Lehman Brothers which survived many a downturn including the Great Depression Of 1929 has announced today that it had filed for bankruptcy. The going bust of Lehman is an indication of the US Sub Prime Crisis and the effect it has on the rest of the world including India. Our Sensex was hammered even before Lehman formally declared bankruptcy, simply anticipating the news of their bankruptcy.

The current period is an ideal situation for stock picking especially if you’re interested in investing with a long term view. The markets are in a state where their movements are ‘predicted’ or speculated upon by those who want to make money without investing too much. This has resulted in the market being largely bearish. Such a situation may interest one to invest in the banking sector.

By Priya Nigam

The weekend gone by witnessed the collapse of Bear Stearns in a shocking deal in which the 85-year-old US-based investment bank was bought for only one third its IPO price in 1985. The US Federal Reserve cut interest rates in a meek attempt to restore confidence in the financial markets. This led to widespread speculations of global funds pulling out their local share holdings. The panic-struck Sensex plummeted in the face of intensifying global fears. And the rupee plunged to a six-month low.

I found this clip from Bloomberg on the emerging India which highlights why India is going to be resilient in the face of a US slow down. Wipro's chariman chimes in and gives his opinion that Wipro's business will not be effected.