22 May 2010. Saturday 6.30 AM. Mangalore Airport in Southwest of India. Air India flight from Dubai landed, overshooting the landing zone and crashing to the valley below. The plane broke up in two and erupted into a huge plume of flames, killing 158 passengers and the entire crew. Eight passengers survived miraculously by jumping out of the ill-fated craft, just before it turned into a fireball. Sad sad day for India and the aviation fraternity. Our hearts go out to the families and friends of the bereaved. Investigations to the crash are on but one hopes that we find the exact reasons of the crash and implement the suggested reforms and safety measures to avoid such unwarranted accidents involving loss of human lives in future.
Away from the real world, even the financial world around us seems to be crashing. There is mayhem on the street as indices across the board are developing the habit of dropping 4% to 8% in single day's trading. Across the globe the events unfolding around us are quite unpleasant which have again turned this financial crisis into a pandemic contagion. From US to Europe to Asia, no financial market or asset class is being spared. Again the big guns of the financial world are behaving as if there is no tomorrow. There is a creeping feeling that czars of the financial world are up to their old ways of working in cartel, forcing volatility to be unimaginably high. Otherwise how can you explain Dow Jones losing 1009 points from its day-high and then gaining 651points from day-low on the fateful day of 6th May 2010. I call it fateful because I feel we should spare a thought for the retail investors in US who had to sell off their holdings thinking the Judgement Day was here, only to find that market has recovered 65% on the same day.
You can tow the official line of the Wall Street and believe that it was was glitch in the computer system, or someone inadvertently pushing the sell button. I really think these Wall Street guys have some guts, bandying out such outlandish explanation to what was clear work of cartelization. Here we are not discussing market index of some Banana Republic but market index of the most sophisticated and developed market on this planet. How can regulators in US take it lying down, because exactly after 10 trading sessions Dow Jones again fell to almost same low of 6th May but after first rising 140 points above the day high of 6th May. All this drama being enacted within a span of 12 sessions and yet the US regulators are uncannily silent on the issue. If such an incident had happened in any emerging market then thousands of censures and advisories would have been issued by the regulators and credit rating agencies. But this is Wall Street and they have the license to do anything to swindle the hapless retail investors.
The point I am trying to make is that irrational volatility is here to stay for some time, because bigwigs of the financial world have swung into action and they will do whatever to make market participants bleed both ways. Market bias is negative but beware of wild swings. Presently for investors in Indian market the key level to watch is Nifty 4842, which should not be violated if market has to move up from current level.