If you are one of the stock market investors, then the way stock indices plunged on Thursday might have shaken your heart and finances heavily. Yesterday was one of the biggest downfalls in the stock market, with every index trading lower by more than 3%. Both NASDAQ and Dow Jones indices were consistently down and even after two hours of initial trading they didn’t show any signs of recovery.
The downfall continued till the end and at the time of market closing, both US indices were settled in red by more than 3.5%. This gave strong reason for all the Asian markets to open in red and all of them showed gap down opening of 3%. In the afternoon trading session they just tried to match European indices which were down by more than 4%. Yesterday’s downfall in stock market was an impact of various negative reports which came out at the same point of time in US and that unfortunate day was 22nd Sept 2011. The US economic outlook worsens as mentioned by Fed and the sudden rise in dollar index has ruined the positive sentiments of investors drastically. The price of crude oil fell by more than 1.5%, which made commodity market extremely volatile for the entire day. When the Asian markets closed today, there was no doubt that the red sea would be visible throughout the big Asian stock markets. Nikkei was down by more than 2% and closed near day’s low at 8560, Straits Times was down by 21 points and closed at 2698, Hang Seng closed at 17668 with 243 points downfall, and Shanghai Composite was down by 0.5% and closed to the 2433 mark. In the afternoon trading, Indian market showed some recovery but again dropped down by 199 points with SENSEX finally closing at 16162.
Now many big Asian financial institutions and mutual fund industries are seeking a cautious approach and don’t want to enter till markets get stabilized. In most of the Asian markets, the bearish trend was not only with the indices but stock prices of high beta companies were down by 8% in single day. The equity portfolios of investors dragged drastically and many investors either wanted to shift their portfolio to non-equity funds or preferred sitting with the cash. The yesterday’s crash in stock market may result in increase in demand for commodity market which might raise the gold and silver prices to a new high. Thursday’s market collapse has reminded investors about the year 2009, when companies like Lehman brothers went bankrupt and stock indices were hitting 52 week low. But the situation is not that worst this time, as many Asian countries are vigilant since last turmoil and everyone is ready to resist the post recession impact. The mistakes of last recession has taught lesson to many Asian countries and they are very much prepared to stay immune from financial slowdown. The recent tumble in stock market on account of poor data in US will keep Asian stock markets in bearish mode for short term. But in long term, the country specific factors will recover Asian markets and they can bring golden opportunity for investors in near term.
On Thursday, the financial carnage was all happening at the big bourses and that has given alarm call to every investor across the globe. Even though it looks a collapse and downfall everywhere, it has definitely brought a good opportunity for the investors who want to take advantage of attractive falling prices. As, rightly said by Warren Buffet, ‘Look at market fluctuations as your friend rather than your enemy.’
