The final price for US tax payers is expected to be around $1.8 trillion.
The price tag so far is $900 billion dollars and $700 billion more is needed but that may not come easy with the US Congress yet to take a vote and American citizens asking why they should pay more for Wall Street's mess.
But US Treasury Secretary Hank Paulson is optimistic that this may be the silver bullet that could fix the US financial system.
"Well, what I would say is, I won't bet against the American people. We are an entrepreneurial people, a hard-working people and we will work through this, we always do. I wouldn't bet against the American people and I wouldn't bet against the long-term fundamentals of this country. But this is a humbling experience to see such fragility in capital markets and to ask how did we ever get here," Paulson says.
Meanwhile, it is bailout season in the US. American International Group, Inc. (AIG) got a life support of $85 billion while Fannie Mae and Freddie Mac got $200 billion. Another $300 billion went to the Federal Housing Administration.
But the real question is. Is $700 billion enough to clear up the mess? And what are the implications for the US economy?
More money also means the US deficit will balloon to about $438 billion and will make the dollar weak and inflation would rise. A deflated dollar means inflated oil and commodity prices. This will hit the economy of energy dependent countries like India.
Foreign investments in the form of FII and FDI will also weaken and this in turn will rattle the economy.
"I think liquidity is already getting tight in India and global liquidity squeeze as FIIs withdraw money from India is bound to have its impact," Uday Kotak, VC & MD, Kotak Mahindra Bank, says.
So it all comes back to the US bailout package. As Paulson and Federal Reserve Chairman Ben Bernanke begin their testimony in front of the US Congress , the world including India will be watching closely because as the last few weeks have shown when tremors on Wall Street has left cracks far and wide in the world economy.
Positional
CARRY ALL SHORTS AND NIFTY OCTOBER 4000 PUTS FOR TOMMOROW.SHORT RCAP AGAIN IF TRADES BELOW 1210 AND CARRY FOR TOMMOROW.
NIFTY FUT: Unwinding should continue up to 4123.10-4125.10 zone. Rallies up to 4201.35 can be used to exit. SL at 4253.60-4255.60 zone.
Positional
COVER YOUR MCDOWELL SHORTS AND SHORT ONGC FROM THAT MONEY.ONGC TARGET 1023,1003.
CARRY ALL OTHER SHORTS AND NIFTY OCTOBER PUTS.
Positional
YOU CAN BOOK PROFIT IN INFOSYS,TCS,RCAP SHORTS ONCE
IF RCAP TRADES BELOW1210,SHORT AGAIN FOR A TARGET OF 1150,1130
TRANSFER FUNDS OF INFY,TCS & SHORT BANKS
Positional Traders
HOLD SHORTS AND ROLLOVER SHORTS IN OCTOBER.
HOLD SBI AND OTHER BANK SHORTS AND RCAP ALSO.
BIG FALL CAN HAPPEN IN 4-5 DAYS IN BANKS.
CARRY ALL PUTS.
Cash Market Intra-Day: MOSERBAER (NSE Cash CMP 134.40) going up. Sentiment is weak and take a risk and sell. SL at 136.40 level.
Positional Traders only
CARRY YESTERDAY SHORTS &NIFTY PUTS AS OF NOW.IFspot NIFTY TRADES BELOW4160,TGT 4090,4040
SHORT ESSAROIL BELOW177, TGT170,166.
Selling may continue up to 4204-4206 zone by non-stop.
Hurdles at 4246 & 4254 levels. Above these levels, expect relief rally up to 4294-4296 zone.
Above 4335-4337 zone,
expect a jump up to 4376-4378 zone by non-stop.On Negative Side, rebound expected at around 4164-4166 zone. If breaks then problem too.
Short-Term Investors:
Short-Term Upward Target at 4416-4418 zone.
Short-Term Support at at 4123-4125 zone.
-----------------Strong & Weak futures
This is list of 10 Strong Future:
IOB, BOB, Maruti, Mosear, Jindal Saw, PNB, HPCL, Indian Bk, BPCl & Union Bk..
And this is the list of 10 Weak stocks:
Adlabs Films, Unitech, Polaris Software, KPIT, Rajesh Export, NIIT, Peninsula Land, Ranbaxy & HDIL.
Nifty is in Down Trend.
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BHARAT BIJLEE (NSE Cash):
Likely to Zoom. Technically it should move up.If crosses & sustains at above 1316 level then uptrend may continue.
Support at 1240 level.
Should not be allowed to break at any cost.CROMPTON GREAVES FUTURES (NSE): Likely to Zoom. Technically it should move up.
If crosses & sustains at above 271 level then uptrend may continue.
Support at 241 level.
Should not be allowed to break at any cost.Sell CAPITAL GOODS Stocks
Market may open with small gap down and on support, So, don't short in first 10-15 minutes. Positional target for cash nifty 4000, Be cautious on market and longs, below 4150 more bearish in intra.
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The Dow Jones Industrial Average closed at 11,015.69. Down by 372.75 points.
The Broader S&P 500 closed at 1,207.09. Down by 47.99 points.
The Nasdaq Composite Index closed at 2,178.98. Down by 94.92 points.
The partially convertible rupee <INR=IN> ended at 45.45/46 per dollar on yesterday, stronger than 45.80/82 at close on Friday.
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-ve to Market
1. US Market 2. Asian Market 3. Crude 4. Technical breakout 5. SGX nifty -56 6. Gold.
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Bombay: A Market Of Six StocksLast week the market rallied and investors began asking questions about a market bottom. While macroeconomic issues and market technicals are improving, the overall picture is still ominous. All said and done the market in Bombay is interested in a mere six stocks-Bhel, Larsen and Toubro, HDFC, HDFC Bank, Reliance and SBI. If you do not have any or all of them in your portfolio, then you might as well not be participating in the market.
The reasons are not far off. Falling oil and gold prices are positive, but the big picture is still negative. Once invincible Fannie Mae and Freddie Mac have gone into a US Government receivership, Lehman has gone bankrupt, Merrill has been sold to BOA, and Goldman Sachs and Morgan Stanley may become holding concerns for Commercial Banks. This will conclude the domain for private banking. Additionally, the world's most powerful private financial institutions, from Switzerland's UBS to Citigroup are still reeling from the huge write-downs for billions in bad loans.
With the housing market still in critical condition and the Federal Reserve in panic mode, it's time to make sure your portfolio is well protected for what could be a prolonged Bear Market and an ugly recession. Most investors and fund managers in India while agreeing that the US problems are limited to the Financial and Real Estate markets, refuse to cut earnings for Indian concerns ignoring the draw down effect on Global Economy of a possible prolonged US Recession.
While Herd Mentality does not succeed always, it is sometimes better to stick with the same. The aforementioned Six-Pack is ideal for most Investors in India. Even ShahRukh Khan flaunts his Six Pack Abs, why shouldn't the investors?
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Arvind Parekh
+ 91 98432 32381
