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“In India, companies may fall sick, but promoters rarely do!”

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October 10, 2008

Sensex drops 15.95% and near 2000 points this week to close at 10528

From a Sensex close of 12526.32 on Friday, October 3,2008,it has plunged another 15.95%  and 1998.47 points to close today at 10527.85…In fact today itself it lost 801 points.This is keeping in tandem with similar and worse falls in all World Markets this week too

Now this is what I’m waiting for !…another 2000 points fall next week !…that will bring us into a zone of 8000 to 8500…and some mouth watering prices in selected fundamental scrips to consider tasting into despite IIP Growth Shockers released earlier today for August yoy ( See earlier blog today)  

I may just release the List of Such Selected Stocks to Clients this weekend with my suggested Distress Price  levels to Buy into

ICICI Bank Jt MD ,Ms Chanda Kochhar comes on CNBC to reassure

ICICI Bank’s Jt MD and CFO,Ms Chanda Kochhar just appeared on CNBC in a call in converstaion with the Anchors…Clearly through all her calmness and reassurances there was an underlying and urgent  plea to Depositors and Shareholders and Investors not to Panic and fall prey to the rampant rumour mongering going on

With the Share Price of ICICI Bank already being mauled over the past few weeks and dangerously plunging by an unprecedented 26% today to record a low of Rs 326.70 on BSE and threatening to drop even lower it was absolutely imperative that Depositors and Investors in ICICI Bank needed to know what was happening !

Ms Kochhar defended her bank revealing  that it had

  • A Balance Sheet Asset Strength of Rs 484000 crs
  • A Networth of Rs 47000 crs
  • Liquidity of Rs 12000 crs
  • No real increase in NPAs…
  • An under 10% of Total Assets Exposure in  Global Loans…and even some difficult loans were adequately backed by cash and other collaterals
  • Adequate Profitability

Ms Kochhar said her forthcoming quarterly results will also reassure everyone on the continued  and adequate profitability of the bank

ICICI Bank has since recovered smartly to Rs 370 at 2 pm now

Globally the whole Banking Sector is witnessing A Great Crisis in Confidence and any exposure to troubled and bankrupt corporates and banks and financial houses around the world is played up more than hundred fold as murmurs and rumours grow and spread like wildfire

Clearly ICICI Bank is a victim of this…Ms Kochhar assures us that in the overall context of the size of the Bank it’s troubled exposures are not significant

A few years ago,I recall ex Fed Governor,Alan Greenspan,reassuring the Finance Committee of the Senate that any risk on Mortgage Lending was Low and manageable…What followed  is now history which we are living !

Let’s pray that Ms Kochhar’s conviction in the strength of her bank is correct and not misleading and that the bank does not leak any more holes than we are currently aware off


Shocking IIP Nos for August 2008 were released today.On a yoy basis the overall industrial growth is a mere 1.3 % against 10.9 % 


Sector Growth % in August 2008 Growth % in August 2007
Overall Industrial Growth









Capital Goods



Consumer Durables



Clearly we are staring at a recession in India too following global slowdowns and even meltdowns

The Sensex is critical and at 12.44 pm is down 1042 points at 10286 plunging 9.19% already.The circuit is at 10% of quarter closing of 12750 and not 10% of yesterday’s closing of 11328…so watch out for a fall of 1275 points  to halt trading on BSE

RBI has announced a 150 basis CRR Cut and Infosys has lowered earnings guideline for FY 09 to to Rs 101.06 this morning

Times are clearly tough…ICICI Bank is down 26 % to Rs 335 ! just today…What is wrong here ? Will this Bank Collapse ? Is there some hole in the assets we don’t know about ?..SEBI Chairman,Mr Bhave has no answer  to the question as to what is happening in ICICI Bank…He was talking in on CNBC right now

With such poor IIP figures expect further capitulation of Equities as Corporate Earnings slow down significantly and einfact raise the ugly possibility of a reversalin Earnings growth to negative territory

So how would this affect India’s GDP ?…Clearly expect it to be revised officially downwards.It is projected to be 7.9% for FY 09 but even this recent revision will be revised downwards again…FY 10  projections will be even lower

There is increasing redemption pressure on Mutual Funds and this will lead to them offloading equities in huge quantities   

Even my 80 year old Uncle,who breathes the Stock Market daily before he even breathes in Oxygen and was born just before the Depression of 1929 and has been through it all,confesses he has never seen such financial fear and fright on this planet…and what he does not know is not worth knowing ! 


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