News of the earthquake and the Tsunami horror in Japan flooded in as we entered the final stages of this issue. Six days on, a nuclear disaster looms over the island nation, triggering anxiety across global financial markets. It is hard to predict the long-term impact of the events on the Japanese economy and global stock markets.
The Japanese index, Nikkei, logged its worst fall in several decades with a 10.55% dip on March 15, followed by a smart recovery of 5.7% the next day, before slipping 1.44% again. Indian markets, too, are showing signs of uncertainty. Mirroring Nikkei, the BSE Sensex slid 518 points intra-day on March 15 before recovering to close 245 points lower, then rising 191 points the following day, and, as I write, dipping 208 points on March 17. So, where are our markets headed? It's anybody's guess.
Stock markets have minds of their own and can surprise anyone. During good times equity markets can be the biggest creators of wealth. But, at times, the tectonic shifts below the market surface can have deadly repercussions and cause unimaginable damage. No wonder that the global financial crises of 2008 and 2009, and the resulting crash in stock markets worldwide, is often referred to as a 'financial tsunami'. One needs to be careful while investing in the stock market, the riskiest end of the investment spectrum.
Our cover package on the stock market gives you a feel of what could be in store and what you should keep a watch on while investing. We wind up the segment with a rare interview with former RBI governor, Bimal Jalan, where he talks about how his much-debated report on Market Infrastructure Institutions (MIIs) will benefit investors. We also present a column by Joseph Massey, MD and CEO, MCX Stock Exchange, a bitter critic of the report.
With the summer-travel season approaching, we have also put together a section on how to best manage your money while travelling and the importance of purchasing your insurance cover while on vacation, just in case.
The distressing events in Japan show that when an unprecedented catastrophe strikes, no amount of preparedness helps. But then, one shouldn't drop one's guard. So, keep your finances in order and spread your risks over diverse asset classes to minimise shocks on the financial front.
Sarbajeet K Sen
