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Shaky Shanghai treads on Wobbly Grounds-MELTS DOWN

The Chinese balloon goes kaputt with a slide of 6% in a day and since 12th of June it’s a slump of 32% and the conditions were such that the government had to jam the brakes on the trading. Actually the green is factually red. In China, actually in China the red color is believed to be a auspicious color and because of this reason the stock market in China the SSE (Shanghai Stock Exchange) and the other Shenzhen stock exchange have just the opposite of the stock markets of the rest of the world, there the shares in the negative are indicated with the green color and those stocks in the positive are indicated with the red color.

When the stock markets opened on the 8th of the July the electronic color totally flashed as if splashed with the green color.  During the past three weeks the Chinese investors have drowned their investments to the tune of 202 lakh crores which is just the double of the Indian stock market, as the Indian stock market is of 102 lakh crores, and close to 1300 companies that are 45% have ceased trading in China and the small time investors have clustered to withdraw money from the markets. The recent development in the Chinese market is just the fallout of the fake Bull Run where the investors had invested funds borrowed on 20% interest and now they are withdrawing the funds from the market.

The growth rate is on the slide in China and the sentiments in the SSE are panicky. Many agencies are forecasting that India is going to beat the dragon in terms of economy and growth. The Chinese government have taken measures to counter like till 6 months shares cannot be disposed off, and even the finance companies have been forbidden to disinvest, and IPO of close to 28 companies have been put on halt

The forecast of the domestic brokerage houses is that the FIIs will be on guard and do restraint investments in China as the markets there will be uncertain for some times and so it is a boon in disguise that the FIIs will be focused on the Indian markets because The Bank Of America Merrill Lynch says that the Indian market is the most favorite amongst the emerging market peers. The Indian markets appear to be very concrete. As such the panic in the Dalal Street was just an overreaction as usual to the Shanghai meltdown reacting to the figures rather than the facts. However India stands a strong contender of the best alternative investment destination in the world. It is however very hard to digest why the Indian market is so prone to the infection of the sentiments of the events going around in those parts of the world elsewhere who have very little to do with us. It is high time to administer some vaccination for the D-Street.