The Hindu Business Line : Wounded bull?

Sentiment plays a key role and even a small negative news results in widespread panic selling, ruining the fortunes of the investors. Behavioural anomalies lead to divergence between the fair value and market value of the stocks.

The market is charged with greed and is beset with anomalies. Retail investors who ventured into derivatives market were badly wounded.

Mutual trust is lacking among clients, intermediaries, custodians of the market and the issuers. Once the speculation is checked, volatility will come down automatically.

When a person who sells high (or buys low) pays a tax, it acts as a disincentive to push prices.

The investors must avoid taking high risks, stick to long-term goals, observe patience and be discreet when it comes to picking stocks.

T. S. Sundareswaran, New Delhi

The secondary market is witnessing a high volatility that is affecting the primary market too. The investors’ confidence is rudely shaken. The main cause for the fall in stock prices is the unrealistic valuations. The company promoters also wanted to make money with the support of the secondary market. Most of the issues were priced very high and targeted at gullible investors. The intermediaries also create lot of hype on the stock market and the kind of returns it can generate. Though SEBI has done a good job so far, more remains to be done.

Krithivasan, e-mail

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Responses for Racy Cases on US interest rate cut

The article on US interest rate cut was really interesting and very useful for students like me. After reading it, I developed a fascination for the subject and I read more books on international finance.

It will be helpful if you can explain why the RBI and other central banks are so concerned about Fed rates? Why do banks such as SBI and ICICI Bank look for Fed signals to decide their lending rates (particularly housing loans)?

Surendra Nuni, e-mail

The article on US interest rate cut was very simple to understand and must have helped clarify a lot of things for beginners.

I would like to you exchange thoughts on the whole economic scenario of the US and its stock market.

Siddharth Purohit, e-mail

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