Why has the Sensex suddenly started falling? Here are 5 convoluted reasons: 1. Food inflation is going up.

Look at the prices of vegetables! They are supposed to go down in winter, when supply is plentiful and wastage is less. Base effect was supposed to kick in. The late rains caused havoc. Some jiggery-pokery is going on with onion distribution. 2. It is not food inflation then. So it must be the interest rates. To tackle inflation, the RBI has been increasing interest rates. Now the banks have started offering higher rates on fixed deposits. That means borrowing costs are also increasing. So people who borrow money to invest in the market have to pay more. They must have scaled down their borrowing. 3. It must have been the FPOs and IPOs, which sucked out large amounts of cash that would have otherwise been invested in the secondary market. See the massive amount that the Coal India IPO garnered. A totally corrupt and inept management, digging out poor quality coal that burns holes in boiler tubes, managed to sell a dream of great future growth and sold a lemon to the public. The newspapers made a big song and dance about employees not touching their allotted quota because of foolish advice from their unions. Looks like they were the smart ones. 4. A-ha! So it is the FII selling that has triggered the sudden fall. But the FII selling has been matched by DII buying. The Sensex should have moved sideways instead of dropping like a stone. May be the FIIs are selling the Sensex 30 stocks and the DIIs are buying stocks other than the Sensex constituents. Then why are small and mid-caps also falling? If small investors are feeling even more confused after reading those reasons, then dont blame me. I did mention that the reasons are convoluted! Forget about the reasons. Look at this correction as an opportunity to invest in some fundamentally strong stocks that have been beaten down. Remember Warren Buffetts wellknown secret about stock market success: Be greedy when others are fearful, and be fearful when others are greedy.

Growth and unemployment

The Irish economy entered severe recession in 2008. Ireland entered into an economic depression in 2009. The Economic and Social Research [7] Institute predicted an economic contraction of 14% by 2010. In the first quarter in 2009, GDP was down [8] [9] 8.5% from the same quarter the previous year, and GNP down 12%. Unemployment is up 8.75% to [10][11] 11.4%. The economy exited recession in the third quarter of 2009, with GDP growing by 0.3% in the [12] quarter, but GNP continued to contract, by 1.4%.
[6]

Group effort FALL IN SENSEX FEB -09 1. Slow down in US economy because of sub prime crises leads to fall in sensex. 2. Recession prospect in India in 2009 because of fall of Lehman brothers in US market. 3. Foreign funds have pulled more than $1.8 billion from Indian shares this year after outflows of 13.3 billion $ in 2008. 4. Asian market hits new lows on concerns over the health on financial sector in western market. 5. Global demand went down of goods and services because of panic in the market. 6. Unemployment rate risen up to 10% in US. 7. The FII sellings that has triggered the sudden fall. 8. The number of defaulter increases drastically in 2008 because of crash in financial sector. 9. Coupling in the global market is also the reason of downfall. 10. IT giants like TCS , Infosys, wipro is reduced their exports.

RISE IN SENSEX DEC-10 1. Record FII of $28.7 billion powered the annual gains in the main index which rose to its highest close in the year? 2. FII in Indian equity market has closed to 75billion $ 3. The recovery that started in 2nd half of 2009 will sustain in 2010. We expect the US GDP growth to be around 3.5& where as Europe and Japan will grow around 2 %. 4. The US economy is recovering 5. US unemployment rate felt down to 8.3 % 6. US president Barack Obama endorsed Indias long held demand for a permanent seat on the UN Secretary council, a reflection of the Asian country growing global weight and its challenge to rival China. 7. Positive coupling because US market performed well or recovered their past losses.

DOMESTIC SLOW DOWN 1. NEGATIVE CLOSING OF US MARKET AND WEAK ASIAN MARKET

Final assignment topics 1.INTRO 2. ECONOMIC STATISTIC AND ACTIVITY 1. Gdp and gnp (ABSOLUTE AND GROWTH RATE) 2. per capita income 3. average family income. 4. distribution of wealth 1 Income classes 2 PROPORTION OF POPULATION IN EACH CLASS 3. IS DISTRIBUTION DISTORTED. 5. ECONOMICS PRINCIPLE 1 EACH SECTOR CONTRIBUTION IN GDP 2 EACH SECTOR CONTRIBUTION IN EMPLOYMENT. 6. FOREIGN INVESTMENT ( FDI & FII INFLOW N OUTFLOW) 7. INTERNATIONAL TRADE STATISTICS - 1 EXPORT AND IMPORT. 8. BALANCE OF PAYMENT SITUATION 9. EXCHANGE RATE AGAINST DOLLAR --- 1. CURRENCY MOVEMENT 10. INFLATION RATE.

3.EXECUTIVE SUMARY AND CONCLUSION. ( IN WORD DOCUMENT)

Data

Average monthly -( DATA COLLECTED FROM - http://business.mega.mu)

Gnp -

(DATA COLLECTED FROM

http://www.tradechakra.com)