The Indian stock-market crash

Only a couple of times before in my life have I seen the way the BSE Sensex and the Nifty crash today! The last few times were on Fridays, but today, bloodshed occurred on the first day of a new trading week, i.e. on a Monday. The Economic times stated five reasons (for some reasons best known to it, most events on the stock exchange are analysed with this omnipresent heading of "Five Reasons") for this crash. The chief ones among these were the falling oil prices, the Greek Crisis, and the mother of them all, the contracting Chinese economy. In addition, it also gave a passing reference to exiting FIIs and some other, relatively unimportant stuff. 

Be that as it may, it now turns out that investors have all lost big amounts of money in the market for now. So, what should one do? Panic and exit the market, or use this as an opportunity to buy in more of good stocks? Really, it takes a lot of courage to do contrarian buying, but, as the gurus say, you should buy when others are selling and vice versa.

So, let us see what happens tomorrow.

On to more serious topics ... Inflation in India rises.

In keeping with my resolve to write a little more seriously, I am going to tell you about inflation rates in India in the present context.

As the readers know, global prices of fuel have hit the roof in recent times, and hence, the prices of petroleum and petroleum products, which were, until now "controlled" (with generous governmental subsidies) at low levels, were raised by the ruling central government about 14 days ago. The rise was about 10% for petrol (what Americans call gasoline), 8% for diesel and about 15% for cooking gas (LPG). This was met with protests by the opposition parties and also by non-governmental organisations. However, it must be said to the credit of Prime Minister Manmohan Singh (no doubt advised by Sonia Gandhi, nee Maino, widow of Rajiv and mother of Rahul and Priyanka), that his government has NOT backtracked on the price hike and the people are learning to live with it.

As a result of this price rise, coupled with the meltdown in the stock markets, the gradual appreciation of the dollar vis-a-vis the Indian Rupee, the sub-prime crisis and the economic and industrial slow-down, the inflation rate (as calculated by the WPI or the Wholesale Price Index) has climbed over the past 4-6 months from an acceptable 4-5 % to an unacceptable 11.05 % in the week ending on June 14.

... And the people are feeling the pinch. The prices of vegetables, fruit, meats, and virtually every other staple, consumable, and non-perishable essential and luxury goods have risen to hitherto unseen levels (I am talking with a time-frame of at least the last ten years!).