Share Markets Hit Economy Down whats next?

Indian Economy is going down, the stock markets crashing heavily, IT down with top companies cutting jobs making settled people run for new scopes and opportunities.

I was just checking the google news section for jobs and found multiple news with these titles – MetLife to cut jobs shares plunge, Barclays to cut 3000 jobs post Lehman deal, Deutsche Bank to Cut Jobs, MetLife to cut jobs, Focus to cut jobs, Forty jobs cut, Micron Memory Chips cutting jobs & Russia firms cut jobs, output as crisis hits economy. These kind of news should be taken up seriously because its going to effect everyone. If the companies are cutting jobs they would expect the available employees to work better and give more outputs in order to make sure the companies can continue their operations. Everyone is either recommended to increase their capabilities and try to work harder because at this stage its very important to give better outputs and make sure that the jobs are not lost. The effect is not only on IT related companies but on most corporates with best jobs being cut and many left jobless with loans on their accounts.

In case of the stock markets the stocks have gone down around 70% from this jan 2008 continued with the Reliance Power shares issue which created a huge buzz in the market making all the investors sell of their other stocks and reinvest the same money in Rpower which later came out to be a failure because the company has opened the issue but the power operations are set to be started from year 2009 which is the reason we cannot expect any bonus, dividents before the company really makes any money. The trend continued falling and the stock markets which were at 21000 points sensex went down in 16000-17000 range when the world crisis started effecting and the investors started pulling out their money from Indian stock markets to cover their loss in the US markets, connected to which the sensex continued its drop and is currently at 10k levels and expected to reach the bottom level of 9000 points with a jump back expected by 2 years and nothing sooner but later.

Lehman Brothers[LEH] – A global investment bank which got bankrupt last month[September 20, 2008] has added to this crisis and has made most of the banks lose their money who had lend their money to lehman bros. America’s fourth-largest investment bank Lehman Brothers Holdings Inc has filed the biggest bankruptcy petition known to mankind. The stocks of lehman broke down by 90% and gave seriously huge loss to the stock investors. This issue had a serious impact on the whole world’s markets and there wasa huge panic everywhere.

Connected to this Lehman Brothers was our Indian Bank ICICI Bank Ltd which had lend money to lehman and would have to suffer the loss. The bank was closed on 28,29 & 30 of October for their half yearly closing + a holiday and the stocks of ICICI Bank went down to the 52 week’s lowest which made people feel that the Bank has become Bankrupt and people all over the country started withdrawing funds from the ATM’s to make sure their loss is reduced but finally Reserve Bank of India[RBI] had to announce that there was no bankruptcy problem with ICICI Bank and all their funds are secured. The rumours were just rumours and baseless and no one had to really worry about this problem because Indian banking rules are very strict and hence all their funds are secured to a limit which is 1,00,000Rs/Account in any bank.

Suggestions to Overcome these Problems :

1. If you are a person who saves up his money in bank accounts for secured money with the lowest risks , try to save all your money in different bank accounts with a maximum saving of 1,00,000Rs[Indian Banks Limits] or 1,00,000$[US Banks Limits]. If you have more money try to save in different banks and on your family members names because this way you can have your money secured in case any of the banks go bankrupt.
2. If you have any stocks in the markets purchased before Jan 2008 then obviously you are in a huge loss at the moment, you have 2 options which are either to wait for a longer period rather than losing up huge money by selling at this moment or else investing more at this moment and increasing your portfolio. By investing now you are going to decrease the average investments and reduce the overall risks because this way you can sell of your stocks earlier when the markets gain back a little.
3. If you are having some cash you can invest in mutual funds or lifetime retirement/pension plans managed by companies like Lic, ICICI Pru Life, MaxNewYorkLife.com or Hsbc which require you to invest a fixed amount every year with a investment time of around 20 years. This helps you because these companies purchase units on your behalf based on your approvals of investing in equity[high risk + high return] or debt[low risk + low return]. These NAV’s increase every year and are reinvested. When the 20 years term is completed you get back all your compounded investments + profits within a term of say 5 years on a monthly basis to make sure you enjoy your income even after retirement.
4. When the markets are down, its the person who has already invested the biggest sufferor, but if you have some cash in your hand i would say this is the right time to invest because in long term you can expect the highest returns as the purchase value has fallen to the lowest and you can get a lot more with less money.
5. Gold prices generally increase when the stock markets are down and when the markets are on high points the gold prices are down, this is because generally people tend to invest in a alternative option when something is costly, hence its very good option if you would sell of your gold if you have purchased as a investment because you get the highest value and buy stocks because you get a high quantity.
6. If you are working for a company try to put in the maximum efforts to make sure you dont lose your job and try to decrease your debts as soon as possible, the reason behind this is that the lending companies are also expected to increase their rate of interest which can again effect you a lot. Try out for some alternatives for making money, rather than just experiancing the bad time, because these supplementary income add you a lot of relief at these times.
7. Invest your money in stocks which are more into services like educational services, hospitality because these kind of stocks recover back soon and also invest in stocks which are into daily requirement products like ONGC etc. These type of companies always have a steady growth because of their products/services demand and you can atleast expect regular dividents and less risk.
8. Try to decrease your household expenditure because you need to make sure you can easily survive on the lowest costs and stay on tight budgets. Stop those weekend parties for couple months, try to save up as much you can because the costs are also increasing heavily with the energy and food prices already increased. The markets crashing more and more making everyone suffer this downfall and you need to pay more for the same service when you make less, hence its a very bad situation and planned managed budget allocation is very important at this moment.

These suggestions are based on my personal experiance and iam into web development, though my 90% of business is online, iam working on offline business which can always help me in some risky movements, learn how to run multiple business with good management team and try to invest in multiple areas as i mentioned in the article above.