The year 2008 has probably been the worst year that the world has seen in more ways than one. Ideally I would have liked to reflect upon the past year at the end of the year. But with the turn of events in the last couple of weeks, forced me to write this article.

In the last couple of weeks, we have seen bloodbath on Sensex like never before. It all started at the beginning of 2008 on January 22^nd, if I recollect, when most of the stocks plummeted 20% or so and then SEBI had to intervene. That signaled the doom. But many of us saw that as an opportunity and like many other greedy like minded folks across the world (including yours truly), most of us invested in the Indian stock market thinking it is the time to encash, when the chips were down.

Result – A meltdown, followed by another meltdown and yet another meltdown and till this date the saga continues with no end in sight. That the market will continue further in the same pattern  at least for the next 1-2 years, is a no brainer. Having the guts to fight it out and emerge as a winner, needs a lot more than that – It needs the will power of a monster.

Just take a look at the sudden turn of events on Wall Street and the ripple affect it had on you over the last few days, if not months.

• Market collapse in January – owing to Sub prime crisis in the US, resulted in many BIG firms reporting losses thus leading to cut in their expenditure. What followed was a spate of lay offs, less spending in marketing or advertisement expenses etc. Net result – job losses in IT and BPO jobs in India
• The situation continued further. As Q2 results became more apparent, some very reputed firms came out of their hidden shell and started showing their true color. Net results – Overnight bankruptcy or bailout. Lehman, Bear Stearns, Merrill Lynch, AIG et al bites the dust..
• Come end of Q3 and again we saw a global meltdown with Dow Jones losing almost 25% in the last 12 trading sessions. Sensex was no exception to the rule. We saw how Sensex tanked 20% in the last one week alone.

How has it affected the Indian market?

Many of you may have not realized it yet. But the truth is we are in some really difficult times. If you still haven’t realized that, take a look at the below and decide for yourself.

• Most of the IT institution has a large presence in the Financial Services sector providing support for many applications or software. When there is no business, where is the question of support? With it, all the support functions also will go away
• Industry would see lesser no .of transactions happening. This means a ramp down of the BPO industry.
• USA is a consumer economy. But now Americans are in a liquidity crisis. Most of the Americans will preserve their capital to meet their immediate needs. This means less expenditure. Bad for Exports
• No jobs in IT & BPO sector indirectly means relatively lesser disposable income and thereby lesser per capita purchasing power. That means our retail sectors get hit – Shoppers Stop, Lifestyle etc. will have to really gear up for this carnage
• Less of activity in retail would mean less activity in Manufacturing / Production based industries
• Job losses also means less housing, more housing defaults etc which indirectly hits our Banks and their liquidity – Folks in ICICI, HDFC etc better watch out. You are lucky if you are able to hold onto your job. Although the crisis in India may not be at the scale of the sub-prime market, but it could be very much closer to it.
• Job losses would also mean lesser chances of existence for service based organizations – Les Concierges, First Flight, Blue Dart etc
• First thing companies freeze when they have to cut cost is to cut travel expenditure. That means terrible to the airline, railway industries.
• Added to this, increasing fuel costs leads to less fuel consumption which in turn leads to a less vibrant auto sector.

The list can go on and on and on. The point is – All of us have to realize that this is the end of an era, an era where everything was booming, where everything sounded so hunky dory and everyone had an opportunity not just to survive but to excel. What can come out of this crisis is still a debatable issue – For all you know this could be just a passé and we would be sitting pretty again in the next 1-2 years..

What we have seen in 2008 is the end of a Dashing Era. What we have not seen is the beginning of a more Dashing, more Vibrant, more Bouyant and even more Colorful Era which is yet to come. I am sure, with all our combined efforts, it is just a matter of time.

I am an eternal optimist but slightly realistic too. While I do want to see growth all over, I know that there are limitations and everything may not work as per our plan. Hence the best option now is to hope for the best and prepare for the worst.

In the hope the best is yet to come, we at India Special wishes all its readers

A Very, Very Vibrant and Happy Dash-era!!!

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