Markets in the Red!

BSE index fell below 18K mark to touch 17.5K. World wide there have been reports of heavy losses in the respective stock exchanges across Europe and Asia taking a cue from Wall Street following the announcement of the 145K "stimulus" package by Bush. Out here in Toronto, we have witnessed steady decline everyday for the past four to five days. Drops averaging, I guess, around 175 points per day.
It is interesting to see how things unfolded in Dalal Street. We had the largest IPO from Reliance Power that got oversubscribed many times over in the first hour itself. There was a simultaneous drop in the indices and that was explained as investors divesting their other holdings to get into the Reliance Power IPO. The word on the street is that the earliest project of Reliance Power would take atleast a year to manifest. So we see heavy optimism on one end over some future positive outcome and lots of really good companies losing their market cap very rapidly at the same time.
I have seen my portfolio lose around 18% value, but I am hanging in there. I believe that everything is relative. Everyone is in the same boat. It would be unwise to realise the loss by selling out the positions, instead one has to wait out the spell of negativity. One report says that the Asian markets (excluding Japan) have almost 47% of their trade confined to Asia as against 39% earlier. This implies that the influence of USA is that much less on the Asian Markets. If there is a little strength in Europe and Japan, then Asia should be able to weather the storm.
However, apart from the current woes in USA, it is believed that in the next couple of month another batch of sub-prime mortgage borrowers will enter a phase where their interest rates will go up by 2 to 3%. That is likely to bring about a reasonable amount of delinquency and the second wave of ABCP related issues. Probably those corporates that have estimated and decleared their ABCP losses might revise upward, their estimates. This is not likely to install confidence in the investors.
I also think that in the modern environment where communication technology has collapsed the world into a small global village, the power of media should not be underestimated. We sometimes talk ourselves into really bad economic scenario. The 24 hour news channels repeat the same negative economic news until something new and equally bad comes along. This does not help any one!
Let us wait and watch how things unfold.