==>> NIfty at a very crucial levels 4800

Today Nifty opened flat and we saw some rally till 4976.7. Investor thought that, after such a trauma that happened a day back, there could be some relief rally today. But the Nifty within minutes of the opening slipped in the negative zone.

As mentioned earlier on 03/03/08 that the Nifty has a good support at 4800 levels. You can see that the Nifty made a low of 4812.95, which is very close to the support level mentioned. I have also mentioned that the close below 4800 can take Nifty to 4450. Nifty bounced back from 4812.95 levels and there was good short covering in mid hours. Due to the short covering Nifty rallied till 4950, but closed at 4864.25.

In the today’s leading paper, I read an article about; Mr. Warren Buffet discussing about the scary Subprime losses in US of nearly $600 bn. Initially it was estimated at $400 bn. Losses, which has incurred by major Financial Institutions will surely take a lot of time to heal.

To be named some, Citi Group, UBS, Morgan Stanley, Merrill Lynch, HSBC, etc.. The black clouds are not only on these banks, even some of the Indian Banks too have big exposure to credit derivatives. Credit derivatives are instruments for which the underlying asset is a loan or a bond. Marking to market means valuing a portfolio based on the prevailing market price.

ICICI Bank has the highest exposure of $1.5 billion. SBI has an estimated exposure of $1 billion, BOI of $300 million, and BOB of $150 million. About 5-10 per cent of this figure could be the losses that these banks could incur.