Financial Crisis And India Fina

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Financial Crisis And India Fina

  1. 1. FINANCIAL CRISIS -JONTY MOHTA (UGP/09-12)
  2. 2. HOW IT STARTED ? In USA • The Epicenter • Sub-prime Mortgage Crisis • Created fundamentally by the government policies and institutions. • Quasi-Government companies: Fannie Mae and Freddie Mac IIPM AHMEDABAD 5/10/2010 2 UGP/09-12
  3. 3. IN USA… • Lehman Brothers bankruptcy • Sale of Merrill Lynch to Bank of America • AIG demand of loan from the federal reserve • Created panic in WALL STREET and throughout the global indices IIPM AHMEDABAD 5/10/2010 3 UGP/09-12
  4. 4. DOW JONES FTSE-100 DAX SHANGHAI US UK GERMANY CHINA 11,543 5,636 6,422 2,397 8,451 3,932 4,541 2,073 CAC-40 NIKKEI RTS SENSEX FRANCE JAPAN RUSSIA INDIA 4,482 13,072 1,646 14,564 3,176 8,276 792 11,309 *29th Aug – 13th Oct IIPM AHMEDABAD 5/10/2010 4 UGP/09-12
  5. 5. OTHER CONTRIBUTING FACTORS • High prices of basic commodities • Inflation • Unemployment: ILO predicted 20mn jobs lost by 2009 end • High price of oil IIPM AHMEDABAD 5/10/2010 5 UGP/09-12
  6. 6. EFFECTS ON INDIA • “IF THE GLOBAL FINANCIAL CRISIS CAUSES A RECESSION IN THE MAIN ECONOMIES, THIS WILL COMPROMISE OUR EXPORTS.” ►MANMOHAN SINGH Prime Minister, in an interview to an French daily le Figaro IIPM AHMEDABAD 5/10/2010 6 UGP/09-12
  7. 7. EFFECTS… • Credit crunch • Lesser exports • Decreased production • Lesser investments • Declining sales • Falling rupee • Sluggish real estate to affect demand for cement, steel and other construction materials IIPM AHMEDABAD 5/10/2010 7 UGP/09-12
  8. 8. THE BIG FALL • MUKESH AMBANI • RELIANCE INDUSTRIES • 59.23 -54% 26.87 • AZIM PREMJI • WIPRO • 15.18 -55% 6.76 st th *1 Jan - 8 Oct IIPM AHMEDABAD 5/10/2010 8 UGP/09-12
  9. 9. CONTD… • K P SINGH • DLF GROUP • 40.81 -76% 9.57 • ANIL AMBANI • RELINCE ADAG • 41.85 -58% 17.47 *in $ billion IIPM AHMEDABAD 5/10/2010 9 UGP/09-12
  10. 10. GOVERNMENT „S ACTION… • Provide liquidity • Attract investors • Avoid rumors • Control basic factors as inflation(8%), repo rate(6.5%), reverse repo rate(5%), CRR(5.5%) • Prevent rupee depreciation IIPM AHMEDABAD 5/10/2010 10 UGP/09-12

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