Here are the 10 biggest falls in the Indian stock market history:

Jan 21, 2008: The Sensex saw its highest ever loss of 1,408 points at the end of the session on Monday. The Sensex recovered to close at 17,605.40 after it tumbled to the day's low of 16,963.96, on high volatility as investors panicked following weak global cues amid fears of the US recession.

Jan 22, 2008: The Sensex saw its biggest intra-day fall on Tuesday when it hit a low of 15,332, down 2,273 points. However, it recovered losses and closed at a loss of 875 points at 16,730. The Nifty closed at 4,899 at a loss of 310 points. Trading was suspended for one hour at the Bombay Stock Exchange after the benchmark Sensex crashed to a low of 15,576.30 within minutes of opening, crossing the circuit limit of 10 per cent.

May 18, 2006: The Sensex registered a fall of 826 points (6.76 per cent) to close at 11,391, following heavy selling by FIIs, retail investors and a weakness in global markets. The Nifty crashed by 496.50 points (8.70%) points to close at 5,208.80 points.

December 17, 2007: A heavy bout of selling in the late noon deals saw the index plunge to a low of 19,177 - down 856 points from the day's open. The Sensex finally ended with a huge loss of 769 points (3.8%) at 19,261. The NSE Nifty ended at 5,777, down 271 points.

October 18, 2007: Profit-taking in noon trades saw the index pare gains and slip into negative zone. The intensity of selling increased towards the closing bell, and the index tumbled all the way to a low of 17,771 - down 1,428 points from the day's high. The Sensex finally ended with a hefty loss of 717 points (3.8%) at 17,998. The Nifty lost 208 points to close at 5,351.

January 18, 2008: Unabated selling in the last one hour of trade saw the index tumble to a low of 18,930 - down 786 points from the day's high. The Sensex finally ended with a hefty loss of 687 points (3.5%) at 19,014. The index thus shed 8.7% (1,813 points) during the week. The NSE Nifty plunged 3.5% (208 points) to 5,705.

November 21, 2007: Mirroring weakness in other Asian markets, the Sensex saw relentless selling. The index tumbled to a low of 18,515 - down 766 points from the previous close. The Sensex finally ended with a loss of 678 points at 18,603. The Nifty lost 220 points to close at 5,561.

August 16, 2007: The Sensex, after languishing over 500 points lower for most of the trading sesion, slipped again towards the close to a low of 14,345. The index finally ended with a hefty loss of 643 points at 14,358.

April 02, 2007: The Sensex opened with a huge negative gap of 260 points at 12,812 following the Reserve Bank of India [Get Quote] decision to hike the cash reserve ratio and repo rate. Unabated selling, mainly in auto and banking stocks, saw the index drift to lower levels as the day progressed. The index tumbled to a low of 12,426 before finally settling with a hefty loss of 617 points (4.7%) at 12,455.

August 01, 2007: The Sensex opened with a negative gap of 207 points at 15,344 amid weak trends in the global market and slipped deeper into the red. Unabated selling across-the-board saw the index tumble to a low of 14,911. The Sensex finally ended with a hefty loss of 615 points at 14,936. The NSE Nifty ended at 4,346, down 183 points. This is the third biggest loss in absolute terms for the index


http://www.rediff.com/money/2008/jan/21spec1.htm

Note all happened in the last 3 years when the BSE has gained height after height

OTTAWA, WASHINGTON -- Ben Bernanke should have been enjoying a national holiday like the rest of America on Monday. Instead, the chairman of the U.S. Federal Reserve was anxiously watching the rest of the world's stock markets plunge and grappling with what to do about it.

By evening, much of the financial world was expecting him to make a historic rate cut - and he was under pressure to make a bold move.

In Ottawa, a much more ordinary and planned process was well under way. At the Bank of Canada building across from Parliament Hill, Governor David Dodge was meeting with his six-member governing council to confirm the last interest rate decision of his distinguished career.

That afternoon, as he discussed the economy with his deputies, Mr. Dodge had no sure indication that the U.S. Federal Reserve had a 75-basis-point rate cut up its sleeve. Maintaining an independent monetary policy for Canada has always been a priority for Mr. Dodge, as was preserving the central bank's hard-won reputation as an inflation fighter.

So when he approved the final press release Monday afternoon, he and the council decided that the key interest rate should come down - but only by a smidge. Canadian economic fundamentals, they calculated, were still looking strong, despite the carnage in the United States.

The decision, and the reasons behind it, went to the translation department, and then off to be printed in English and French. It was business as usual.

But between then and the time the decision was made public yesterday morning at 9 a.m. EST, things changed considerably. At 8:20, the U.S. Federal Reserve announced a cut in its benchmark federal funds rate of 75 basis points.

And the Bank of Canada, according to some economists, was caught flat-footed.

"After the move that was done by the Fed, the market was anticipating 50 [basis points]," said Mark Chandler, a fixed-income strategist for RBC Dominion Securities Inc.

At stake is the ability of the Canadian economy to withstand a U.S. treading close to recession and a rate scenario that sets the stage for a soaring Canadian dollar. With the spread between Canadian and U.S. rates now widening, the Canadian dollar once again looks attractive to speculators.

Canada can't afford that right now, with the U.S. slowdown already cutting into Canadian exports and threatening economic growth.

On Monday evening, shortly after Mr. Dodge signed off on the press release, Mr. Bernanke convened the Federal Open Market Committee. They met by video conference, with Mr. Bernanke chairing from the bank's granite head office.

The committee members talked from 6 p.m. until about 7. They opted to act quickly in a bid to halt the downward spiral in financial markets.

But the feeling among committee members was by no means unanimous. Mr. Bernanke's Fed remains an uncharacteristically divided place, and during the call, St. Louis Fed president William Poole argued that the central bank should wait until next week's scheduled meeting before doing anything.

Instead, the rest of the committee members voted to make the largest cut in the federal funds rate since the 1980s.

Overnight, as they geared up to make their announcement of an emergency rate cut, the rumour mill kicked into high gear. By yesterday morning, market expectations were high that the Fed was going to make an aggressive move.

Mr. Bernanke and committee members likely reflected on their decision one more time Tuesday morning, looking at overnight markets, and at 8:20 a.m., he pulled the trigger.

Meanwhile, in snowy Ottawa, the press release carrying news of a small quarter-percentage-point cut had been issued at 8 a.m. to journalists in a lock-up. Mr. Dodge did not make any last-minute changes, and the quarter-point cut went ahead as planned at 9:00.

While the Fed's decision yesterday was taken at the last minute, and the Bank of Canada had already travelled far down its own path of a small rate cut, it was not a point of no return, sources close to the central bank say.

Mr. Dodge has close contacts at the Fed, including Mr. Bernanke. And his deputies are also well connected. Even if the Fed didn't contact them to give them an official heads-up, they no doubt heard the market rumours and may well have made some personal calls late Monday night and early Tuesday morning to get a feel for the Fed's intentions.

As news of the cuts sank in, market players were thrilled by the Fed's move. But in Canada, many were disappointed.

Now, economists say, the Bank of Canada has some serious catch-up to do, and will likely have to cut rates steeply in March.

The central bank made a point of saying yesterday that inflationary pressure had dropped way back, and would not even edge back up to the bank's 2-per-cent target until the end of 2009. That leaves plenty of room to cut rates steeply without fear of igniting inflation, economists say.

A series of gradual cuts could put the central bank in a situation similar to that of 2001, said Don Drummond, chief economist at Toronto-Dominion Bank.

Back then, the Bank of Canada resisted following aggressive moves by the Fed to stave off a recession, but in the end had to make steep reductions to catch up with the Fed moves and keep the Canadian economy afloat.

The Fed, by acting now, just a week before its next regularly schedule meeting, wanted to pre-empt market turmoil, said Alice Rivlin, who was vice-chairwoman of the Fed from 1996 to 1999. "It's a signal that the Fed is on the case," Ms. Rivlin said. "This is a rapidly changing situation."

The European Central Bank, which did not match the Fed in lowering rates, remains a lot more concerned about inflation that the Americans or Canadians, she said.

Economists said Mr. Bernanke and ECB president Jean-Claude Trichet talk to one another all the time and that Mr. Trichet would have been aware of the U.S. rate cut before the announcement.

But the ECB declined yesterday to hint which way it is leaning. Falling euro zone unemployment rates - the last unemployment figure, from November, was 7.2 per cent - suggest the bank has little reason to cut in the near term.

***

THE FED REACTS

Chairman Ben Bernanke surprises markets with a three-quarter-point cut to the key lending rate, sending indexes into gyrations and triggering a chorus of criticism.

The move

Not since 1982's deep recession has there been a more dramatic cut to U.S. borrowing costs. And it was the first emergency rate cut since the post-9/11 period. Expect another cut next week.

The reaction

In Toronto, investors sent the TSX on a two-day intraday swing of 1,337 points from Friday's close. The Dow plunged and then rebounded, but closed down for the day.

The way ahead

Mr. Bernanke's move is seen as too little, too late to resurrect the bull market. And it will not prevent the raft of mortgage foreclosures in the coming year.

"[It] won't arrest the recessionary dynamic now unfolding but it could well set the stage for the next asset bubble in America's bubble-prone economy."

Stephen Roach, chairman, Morgan Stanley Asia

"The Fed is panicking. This action has come a bit late, but nonetheless suggests that the central bank has finally capitulated to growing deflationary pressures in the U.S. economy."

Chen Zhao, BCA Research

"Today's [75-basis-point] reduction in the federal funds rate was appropriate and helpful."

IMF spokesman Masood Ahmed

© The Globe and Mail

Rob Carrick


Thursday, January 24, 2008

Falling stock markets are a lot more bearable if you know what to expect.

So let's study a little history. Back in early 2001, the markets were in a position similar to the one they're in now, and a whiff of panic was in the air. Headlines in the Canadian business press back then show it was justified in the short term, because the ensuing bear market was long and severe.

The longer-term view from today makes all the fearful recriminations of early 2001 look almost quaint by their datedness. Here's one for you: "Research In Motion shares plummet," from Jan. 3, 2001. A couple of days later: "Research In Motion continues to spiral."

Man, investors really took it to RIM back then. On Jan. 2, shares fell a stunning $33.60 or 28 per cent to close at $86.90. Over the next year and a half, the company was pounded so hard that the shares got down below $20. A crushing blow to investors, right? Not the ones who hung on. RIM shares are up a total 2,558.8 per cent in the past five years and have gone through a pair of stock splits.

With its BlackBerry wireless e-mail device, RIM is a global franchise that is unlike almost any other Canadian company. So, no, it's not a proxy for all stocks. But the RIM experience of the past five years does serve as an example of how good stocks have a future beyond the drubbing they've undergone lately. Remember that when you see the words "plummet" and "spiral" used about something you own.

Recession worries in the United States are top of mind now, just as they were back in 2001. And just as the U.S. Federal Reserve delivered a well-received interest rate cut on Tuesday, so did it cut rates in early 2001. This explains the following headline from Jan. 5 of that year: "Fed interest rate cut a turning point for the markets."

The markets did in fact rally back then. The Nasdaq, epicentre of the unfolding tech disaster, actually surged 14 per cent in a single day. On Tuesday, the S&P/TSX composite managed a tamer but still considerable rise of 4.2 per cent.

What happened next was that the markets kept falling. Thus we have this headline from Feb. 26, 2001: "Fading Fed effect adds to gloom: Even rate cuts aren't enough to stave off bears."

It's quite likely we'll see a repeat of this headline in the months ahead. It's no big deal. Interest rate cuts by central banks work slowly to revive slowing economies, which in turn helps improve corporate profits and, in turn, stock prices. In the short term, rate cuts are to the stock market what coffee and a chocolate bar are to you when you're hungry and tired.

By early February of 2001, with the markets weakening further, the level of fear began to rise. "We are in a major bear market," a Feb. 24 headline declared. "Pessimism consumes markets," said a March 13 headline. "Selling wave swamps market," said a headline just two days later.

We're not technically in a bear market yet on the TSX, if you apply the rule that stock prices have to be 20 per cent below their recent peak. But assuming the bear does arrive, and that's one of the safer bets going right now, then expect to see the level of fear ramped up steadily.

They're unnerving, these headlines, but they're a lot easier to shrug off if you're ready for them. And shrug them off you absolutely should. The day that pessimism consumed the markets back in 2001, the S&P/TSX composite index closed at 7,930. It gradually worked its way down below 6,000 before peaking this past July at 14,646. Now you know. Stock markets fall in a bear market, and then they fall some more. It all works out in the end.

Of course, nobody knows exactly how long the pain will last. That's why we saw headlines in 2001 along the lines of this one from March 24: "Now could be a good entry point into stocks." The markets fell a lot from that point, but it was still a good entry point for someone with the patience to hang on for the big upswing that appears to have ended only recently.

Here's one last look back, this one from a very early 2001 story looking back at how badly the U.S. markets had done the previous year. "Bonds and cash the only winners," said this headline, which could apply to any bear market in any year.

Have some bonds and cash in your portfolio for sure, but don't sour on stocks just because they're plunging in value. These things happen from time to time, but they're a lot more bearable if you know what to expect.

© The Globe and Mail

Leeson fraud now looks like small change
Eric Reguly


Thursday, January 24, 2008

ROME — You could almost hear the glee spewing from London's bankers and traders. Move aside Nick Leeson and Barings; France, the country they love to hate, even if it makes decent cheese, can now lay claim to the biggest bank fraud in history. Société Générale Thursday revealed that a rogue trader piled up €4.9-billion ($7.1-billion U.S.) in losses.

This, of course, is bad news for Mr. Leeson, the trader who had dug a $1.4-billion hole in Barings' trading account by the time he fled the British bank's Singapore office in 1995. Since completing his four-year prison sentence, young Nick has made a living giving talks on the rubber-chicken circuit.

But who wants to listen to him now? His alleged French counterpart, identified by the bank as Jérôme Kerviel, 31, may have a better story to tell. How much could he charge to tell how he French fried the country's second-biggest bank, making Mr. Leeson's trades look like pocket change in the process?

It's too early to tell whether SocGen, as it is known, will suffer the same fate as Barings. Probably not, is the answer. At the same time it disclosed the toxic trades, which came on top of €2-billion in losses related to credit exposure to the U.S. mortgage market, SocGen announced it is raising €5.5-billion in new capital.

“The capital increase is fully guaranteed, and will offset the loss generated by the fraud,” chairman and chief executive officer Daniel Bouton said in a letter to the bank's 22.5 million customers. “Société Générale's capacity to bounce back and renew with the profitable growth that has characterized the bank for many years remains intact.”

Perhaps, but there is no doubt the bank's financial health has taken a big hit. Even before the fraud was discovered, the rumours said SocGen is more likely to be victim than victor as the European banks merge into a small number of supergiants. French bank industry leader BNP Paribas is one oft-mentioned potential buyer. Another is UniCredit, Italy's biggest bank.

The bigger hit is to SocGen's reputation, which means heads are bound to roll. The rogue trader and his bosses have already been sacked. Mr. Bouton offered his resignation on Wednesday, but the board talked him out of it.

Who knows how long he'll last. Until l'enfant terrible mucked things up, SocGen had a stellar reputation in the derivatives game. Recently, both Risk Magazine and another magazine called The Banker lauded it with equity derivatives house of the year awards.

What must be doubly embarrassing to SocGen was the fact that Mr. Kerviel wasn't doing anything exotic in the derivatives market. By the bank's own admission, he was responsible for “plain-vanilla futures hedging” on European market indexes, such as the DAX in Frankfurt and the CAC in Paris. This meant he was employed to protect the bank's equity exposure through the use of index derivatives. Think of it as an insurance policy against equity losses. This sort of hedging is standard industry practice.

The problem, the bank says, is that hedge boy wasn't just hedging. SocGen says he took “directional positions” last year and into January that went “beyond his limited authority.” When the losses piled up he, like Nick Leeson, concealed them. The bank said he drew from his in-depth knowledge of control procedures to hide the losses through a “scheme of elaborate fictitious transactions.”

The fraud was uncovered last week and the positions were unwound. SocGen executives called the trades “inexplicable” and said Mr. Kerviel, “who has confessed to the fraud,” did not personally profit from it. There were no other details.

What is astounding is the amount of money he would have had to invest to pile up losses of €4.9-billion. European indexes are down 15 per cent, give or take a couple of points, since the late autumn. This implies the face value of his positions must have been €30-billion or more. How could a single, young bank employee have built enormous positions without the risk gnomes knowing about it? The answer is obvious: There are serious flaws in SocGen's oversight and risk management departments.

SocGen investors took the fraudulent trading losses and writedowns in stride. SocGen shares fell a mere 3.6 per cent, to €76.23, suggesting shareholders think the capital-raising exercise is enough to repair most of the damage. SocGen's woes did not spread to the rest of the market. The European indexes surged yesterday.

The story of the rogue trader could be a one-day wonder. Or it could be the opening salvo in a barrage of bad news. Official investigations are under way and could turn up some ugly information about SocGen's risk management systems, or lack thereof. Executives could get fired and investor confidence in the bank's senior management could wane. Even before yesterday it was an open question whether SocGen could survive as an independent player. Today, it seems more likely that it will not.

© The Globe and Mail

Breaking News from The Globe and Mail

Greenspan on the defensive
WENDY STUECK


Thursday, January 24, 2008

VANCOUVER — The biggest barrier to stabilizing the chaotic U.S. housing market is the oversupply of homes that cash-strapped builders are flogging at rock-bottom prices, former Federal Reserve chairman Alan Greenspan says.

“If there were some kind of alchemy whereby we could pick up all these 300,000 units, that would stabilize the markets,” Mr. Greenspan told a Vancouver audience on Thursday. He was referring to the number of homes in the U.S. that were estimated to be under or near construction when the subprime mortgage market began to unravel.

With those homes subject to vandalism and requiring expensive upkeep, builders are desperate to clear out the inventory, he said, saying that the prolonged slump could be nearing its end.

“We may be close to a point where actual sales levels are starting to bottom,” he said. “We don't have to get rid of it all, we do have to get to maximum rate of liquidation.”

Mr. Greenspan also defended much-reviled subprime mortgages, which were typically extended to borrowers who wouldn't qualify for conventional loans. The loans included products such as interest-only mortgages that allow lenders to pay only the interest for a period of time and other products that start off with a low interest rate and later convert to higher rates.

The products were valuable because they made it easier for more people to buy homes, he said.

But what started out as a niche product took off, snowballing as financial players such hedge funds saw an opportunity in the products and created a bigger pool of products, he said.

“The hedge funds put pressure on the securitizers for more paper and the securitizers turned to lenders and said, ‘we need more paper – whatever you can get, we will take.' Underwriters' standards collapsed,” he said.

In his remarks, Mr. Greenspan admitted he was caught off guard by the rapid growth in subprime mortgages, saying there was a lengthy delay in data coming in on the products and that when he finally saw official tallies, “he couldn't quite believe it.”

Mr. Greenspan also denied being a booster for risky mortgage products, saying that while he noted advantages in some new mortgage products in an often-referenced 2004 speech, he spoke out in favour of conventional mortgages in an address a week later that has been ignored.

While Mr. Greenspan said there is at least a 50-per-cent chance of a recession in the U.S., he did said a recession would be short and shallow because consumer demand and global markets are strong.

Asked about the U.S. government's efforts to stimulate the economy with tax rebates and tax cuts, Mr. Greenspan said such steps are “not likely to significantly support home sales” but would likely increase consumption.

Mr. Greenspan, 81, was speaking to a business audience of about 1,450 in Vancouver. The address, a question-and-answer session with Sherry Cooper, chief economist at BMO Nesbitt Burns Inc., marked his first public appearance since last week's global market turmoil and Monday's historic rate cut by the U.S. Federal Reserve Board.

The drop of three-quarters of a percentage point in the Fed's key interest rate, to 3.5 per cent, was credited with calming markets that were concerned about a U.S. recession and its effects on the rest of the world.

Current Federal Reserve Board chairman Ben Bernanke is expected to follow up with another next week.

The Bank of Canada also cut its key rate a quarter-point to 4 per cent at its scheduled announcement Tuesday, although some analysts had expected a steeper half-point cut. Alan Greenspan was chairman of the board of governors of the U.S. Federal Reserve from 1987 to 2006. He currently works as a private consultant for firms through his company, Greenspan Associates LLC.

In recent months, Mr. Greenspan has been criticized for implementing policies during his term, including record low interest rates, that helped fuel the subprime crisis in the United States and arguably contributed to a wider, global financial crisis now sweeping world markets.

In recent op-ed piece, Mr. Greenspan said the current crisis was “an accident waiting to happen” and was largely the result of a decades-long economic boom in the developing world.

In late 1996, he famously said “irrational exuberance” was showing up in financial markets. He was subsequently criticized for not doing enough to cool overheated markets and stave off the technology market crash at the beginning of this decade.

© The Globe and Mail

The rise and fall of a rogue trader

Jérôme Kerviel is being blamed for losses totalling $7.2-billion.

9 The early days Jérôme Kerviel, 31, spent his first years at Société Générale working in the back rooms, learning the ins and outs of the bank's control systems.

9 A slow start He quietly takes up a small portfolio trading European equity indexes, disguising his trades using his computer acumen.

9 Getting bolder In the middle of last year, he began trading futures contracts, making unauthorized,

big bets that stock indexes would continue to rise.

9 Reckoning Last week, a bank official discovered the trades, by then massive money losers. Monday, the bank unwinds the positions, erasing two years' profit.

© The Globe and Mail


Jerome's salary according to reports was a 'mere' Euro 150,000.

Heck , I wouldn't mind making that 'mere' amount.

http://www.yash.ca/finance/excel_newfunds.php

"We were the first to have an India fund in Canada, the first to introduce a China-India fund, investing solely in the two booming economies of China and India, the first to have a closed ended India fund to trade on the Toronto Stock Exchange (TSX), the first to issue an India based deposit note, and today, we will talk about another first- our Emerging Europe fund," beamed Bhim triumphantly, as he addressed a capacity crowd at the Toronto Congress Centre in Mississauga on January 23, 2008.
Many financial gurus forecast that the next growing billion (after China and India) will come from Latin America and Emerging Europe. Keeping in line with his drive to be the first one on the block, Bhim decided to take the bull by its horns and introduce the Canadian public to the treasures of Emerging Europe including Russia, Poland, Hungary, Turkey and several other Eastern European countries. After a brief video presentation of Excel Funds history, Bhim introduced Ms. Ghadir Abu Leil-Cooper, the head of the team that is managing the Emerging Europe fund, to the room of engrossed advisors.


Ghadir, a PhD in theoretical physics, has been managing money in London for more than a dozen years, and is currently with Barings Asset Management that manages more than 50 billion for its clients. Excel has teamed up with them to manage their new Emerging Europe fund that was launched recently in 2007. Ghadir told us that Russia is benefiting from the strong investment in infrastructure and commodities and global demand for its natural resources. It houses the largest gas company on this planet, Gazprom that dwarfs Exxon of the US. Release of pent-up consumer demand due to the long Communist regime also adds to the growth. Poland is the recipient of vast amounts of investment from Western European countries that are setting up manufacturing facilities there due to the lower cost. "A Polish worker costs as low as one-fourth the cost of a worker in Germany or the UK," she says.

"Turkey is also experiencing a boom, and is one of the fastest growing economies in that region." It should also be noted here that Turkey has been aspiring to be a part of Europe since a long time, and has been participating for more than 30 years in the famed Eurovision song contest every year, so there is special emphasis for it to grow rapidly to meet the requirements to join the E.U.

Asdhir, the suave and pleasant CEO and President of Excel Funds Management, also created history by enjoying the privilege of being the first Canadian of South Asian origin to ring the opening bell at the TSX on September 28, 2007.


Bhim Asdhir receiving the ICCC award 2007 proved to be a banner year for Bhim and his company Excel Funds. The company had a run of prominence winning the highly coveted mutual fund Lipper award for the best China fund (a 'maverick' fund compared to all the grand-daddies out there), getting itself nominated as finalist at the Canadian Investment Awards, listing itself on the TSX (trading under the symbol EXI.UN), issuing the first India and China guaranteed deposit note in conjunction with CIBC and becoming the first company to offer the one and only Emerging Europe fund in Canada. Bhim also won the award for best male entrepreneur of the year from the Indo-Canada Chamber of Commerce (ICCC) and was the first Indo-Canadian CEO and President of a Canada based company to ring the opening bell for the TSX.


From humble beginnings about a decade ago when Bhim started with a dream and a SOHO (small office home office) from his home in Mississauga, when it was very difficult to convince people to invest in his India fund, this debonair dreamer, doer and driver has come a long way, crashing all barriers, to accomplish many firsts. His company, Excel, is all set to surpass the magical figure of 1 billion dollars of assets under management (AUM), a monumental feat for a company that only manages a handful of funds.