Stock market crash

vikram_wb

Indian stock market had a worst bloodbath during the second week of 4th week of jan. It followed suit according to the global waves which triggered the panic.

Few theories which I reasonable are here for your comments

1)The Continued subprime crisis. The banks which posted huge losses could have sold their holdings in the Indian markets. This would enable them make good the losses

2)It could have been a correction in the market because of the overvalued stocks.

3)The fear factor among the economists that if US goes into recession then it affect the stock markets very badly.

Now the Indian cos need to get set to tackle the dark clouds seen ahead.
The best strategy would be ............

akbarkhan

In addition to the factors you listed, I think the other major reason for the crash was the build up of leveraged positions by the brokers and high net worth investors. A fall in the market triggered margin calls on the leveraged positions, which in turn led to more selling and a crash. This really explains the extent of the crash if not the crash by itself.
Also we were in January when normally the November to January bull run ends. If you look at historical data you will see that November to January has mostly been a period of high returns.

vikram_wb

The most attributable reason for this is that the economic factor. This is one of the cascading effect of the dotcom bubble. Financial markets tried to offset the loss through sub-prime mortgaging. There's still lot more waiting on the show to turn up.