Indian markets trying to understand Wall Street changes
22 Sep, 2008, 1654 hrs IST, IANS
NEW DELHI: Indian investors are still trying to evaluate the full implications of the
biggest financial restructuring in the US since the Great Depression of 1929,
analysts said here on Monday.
“What is happening today is similar to what happened after the Great Depression of
1929 when the US federal government set up the Reconstruction Finance
Corporation to provide credit to credit crunch-hit companies,\" said analyst
Jagannadham Thunuguntla.
Thunuguntla is the head of capital markets of India\"s fourth largest share
brokerage firm, the Delhi-based SMC Group.
He was referring to the various measures that the US central bank, the Federal
Reserve Bank and the US government have announced over the last few days.
The US Fed said late Sunday it had agreed to a request by the last two major
investment banks - Goldman Sachs and Morgan Stanley - to change their status to
bank holding companies.
The decision means that both Goldman and Morgan Stanley will be able not only to
set up commercial bank subsidiaries to take deposits, giving them a major resource
base, but they will also have the same access as other commercial banks to the Fed\"s
emergency loan programme.
“The possible downside of this decision is that they (Goldman Sachs and Morgan
Stanley) may no more be able to take the kind of risks they used to take and be
aggressive investors all over the world,\" Thunuguntla said.