Markets across the globe are at their peaks since the Sub-Prime crisis engulfed the world economy last September. Although it was there for some time, it made its presence felt when the so called rock stars of high street finance, the last four wall street investment banks, ran for cover in the second week of September last year. Since March this year the bull has been spotted on most of the occasions but bear has capitalized on the volatility of the markets on some occasions. Since then, Bull has pushed all the indices by more than 30%. To name a few, Nasdaq composite has moved up by 48%, Dow Jones Composite Index up by 35%, NYSE S&P 500 by 40% and Nikkei by 35%. But the star performer has been our very own Bombay Stock Exchange-Sensex which has risen by more than 80% since March this year. This has been made possible by positive quarterly corporate results, positive government reports, dwindling unemployment figure, and growth in Industrial indices, increased oil prices, increased government spending by all countries, favourable growth projections by banks, government & nongovernment agencies.

Banks like Goldman Sachs, Citibank, JP Morgan Chase which were seen chasing Federal Reserve for life support a few months back booked huge Q2 profits even after servicing debt bullets. This brought more cheer among B-Schoolers than in the market. Corporate houses have been successful in riding this wave and have accumulated huge capital. Indian corporate which raised huge capital through Global Depository Receipts and by Qualified Institutional Placement, were seen a few waves ahead.

All these news make us float in optimism and take a look behind; we see lots of instances where a day of Bear Paws upset days of Bull Run. What does this suggest? This says that there is enough pessimism and volatility in the market; too high for comfort. Any half cooked report of a small negative projection by any non entity on any sector has upset the whole market on many sessions. Macroeconomic fundamentals are projected on flowery assumptions and so are still dicey. They have been intentionally projected to boost sentiments, financial markets & the economy. As a result most of the markets are trading by more than twenty times their Price to Earnings Ratio. Most of the listed companies are trading at more than fifty times their Price to Earnings ratios. This indicates that even at such perceived low levels, the market is irrationally upside and will slip once the dust settles and the smoke clears.

The Union Budget was passed on 6th July with a negative short term effect on the markets. The long term effect of this budget, its effect on various sectors, its comparison with expectations and growth parameters have been discussed in details as the cover story of this issue.

We are very happy that in our next issue, Niveshak will celebrate its first anniversary. With your support, good wishes and contributions, Niveshak has successfully completed a full circle around the sun. Together we have witnessed the most turbulent time of the world of Finance and learnt from it. We have seen the fall of banking stars, we have seen iconic companies turning to Chapter 11 bankruptcy or mergers/acquisitions for survival, we witnessed bankruptcy declaration by sovereign states and then we saw economies navigating through the worst of recessions. To mark the success of our journey together, we shall have a special anniversary issue capturing the roller coaster ride that we have been through, the highs and lows of the world economy over the past year, the most fearsome fight between the Bear & the Bull. We invite you to contribute articles on any specific event of the last year or on “The year that was” as a whole. Yes that is the theme of out anniversary issue. Lots of exciting prizes are waiting to be yours. For more information, please see the declarations page or Niveshak website.

What an awesome “Year that was”.

Team Niveshak

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