“The outbreak of swine flu in Mexico killed 150 people and spread to nations as far as Spain and New Zealand” I was scanning through the News Paper and my eyes struck on this news clipping. I was eager to know more and voraciously read the whole story. The news clipping also described the swine flu as the major epidemic after mad cow and avian influenza. I found that world financial market reacted immediately and the bench mark indices of France, Germany and U.K were down by 1.9 to 2.54 per cent. Among the Asian indices Seoul Composite went down by 2.95 per cent and Nikkei 225 slumped by 2.67 percent. I learned that Swine has entered the borders of already sick US also. Our Sensex lost 370 points and Nifty lost 108 points. Oops! I lost around Rs.5000! I should have wound up my position at least at the opening rates. But I didn’t know that the market can catch fever.
Suddenly I remembered what I read in a web article. The market acts on current information. So any sentiment can create a wave in the market. So the swine fever also can play sentiments in the market. The sentiment here was fear of epidemic. If an epidemic outbreaks, the country may have to spend substantially on curative as well preventive actions. The expenditure will be passed on to the public in the form additional taxes or surcharge and the cost of companies can go up. The epidemic also can reduce consumption thereby a reduction in sale which will pull down the bottomline of manufacturers. The importing countries will be cautious in buying goods form other countries which will affect the exports; a loss of foreign exchange. So the swine fever can pull down the economic activities in the country, if it spreads to our territory also. Fortunately, it did not happen and the government still assures us that there are no cases of swine fever in India. Still we must be cautious as any passenger from Mexico, Spain or New Zealand can import the virus to India at no cost to them, but will turn costly to our economy later.
Thus the whole week passed under the pressure of fever and at the end I was relieved when the market closed at SENSEX 11403 and Nifty 3473. That was a great relief for me. At last I can recover what I lost. But I relief did not last, when I found from the calendar that the market was spending holidays for the next 4 days. Friday night, before going to bed I prayed to God “Oh! Me Lord! Please recover the market from the fever and keep it healthy!”
Suddenly I remembered what I read in a web article. The market acts on current information. So any sentiment can create a wave in the market. So the swine fever also can play sentiments in the market. The sentiment here was fear of epidemic. If an epidemic outbreaks, the country may have to spend substantially on curative as well preventive actions. The expenditure will be passed on to the public in the form additional taxes or surcharge and the cost of companies can go up. The epidemic also can reduce consumption thereby a reduction in sale which will pull down the bottomline of manufacturers. The importing countries will be cautious in buying goods form other countries which will affect the exports; a loss of foreign exchange. So the swine fever can pull down the economic activities in the country, if it spreads to our territory also. Fortunately, it did not happen and the government still assures us that there are no cases of swine fever in India. Still we must be cautious as any passenger from Mexico, Spain or New Zealand can import the virus to India at no cost to them, but will turn costly to our economy later.
Thus the whole week passed under the pressure of fever and at the end I was relieved when the market closed at SENSEX 11403 and Nifty 3473. That was a great relief for me. At last I can recover what I lost. But I relief did not last, when I found from the calendar that the market was spending holidays for the next 4 days. Friday night, before going to bed I prayed to God “Oh! Me Lord! Please recover the market from the fever and keep it healthy!”
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