Probable reasons of BLACK FRIDAY

Indraneel Sen Gupta (Vice President-Business Development Research & Product IFAN Finserv Private Ltd.(SPA Group Company) )   (10289 Points)

26 October 2008  


Dear all,
A huge blow was given yesterday due to that massive fall of the sens*x and the nifty in late half session. Their were certain expectations from the house of RBI regarding the rate cuts.
But it did not happened as a result the market went into further slide.Apart from this reason the Asian markets Hangseng and Nikke dropped by 7% to 8% respectively putting pressure on the sentiments and on the global prospective. But more than this I hope the statement of SEBI regarding the statement where (SEBI) on Monday expressed its "disapproval" over lending and borrowing of Indian equities by foreign portfolio investors, or FIIs, in overseas markets, as it was putting pressure on stock prices over here.  Moreover SEBI have made it clear that it will not allow such things in future and it will put an end.


This statement might have forced the FIIs out fear to shed the share which they have lended and borrowed might be stopped any time soon by SEBi which will block the FIIs deals which they have made. Such a step will block their investment mechanisms which will create more pressure on their economic condition (FIIs).
The regulator even has written to some of the prominent FIIs, expressing its displeasure over the matter. SEBI have even told  the regulator has not gone to the extent of banning short sales, but further action would have to wait until more data is available
The constant volume of share which they have shed after Monday is revealing this matter very clearly.
So it is possible that FIIs will continue this type of thing for the next few days along with global bad news.