Government intervention: The price will be high

Friday, October 17, 2008

US industrial output posts biggest fall in 34 years

After one day of positive FII flows, the selling is back on track. Over Rs 1,000cr per day for the last two days. Hedge fund redemptions can only accelerate this trend.

FII & DII Turnover (BSE + NSE)
(Rs. crore)

Trade DateBuySalesNetBuySalesNet
Oct, 0827,260.1436,970.08-9,709.9414,927.869,047.245,880.62
Since 1/1/08 *609,246.16700,680.95-91,434.79245,371.29182,100.6863,270.6

Every news item in India is pointing to a liquidity event; government is interfering in the running of private airlines. This can only get worse. Other industries also will need to cut back on costs and reshape their businesses. Government is single minded focused on elections and will do everything to avoid labor strife.

This focus on achieving something regardless of cost will set the stage for the results of next year. The coming red ink will increasingly be reflected through the most liquid medium, the market.

The fury is not here yet, but it is getting closer.

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