The over night news of the crumbling of 2 giants has shocked the financial markets like nothing has in the recent pass. This is just the early part of the pain be ready for more in the days to come.
Coming to the news. Early this morning, Lehman announced it would file for Chapter 11 bankruptcy protection, While the demise of the 158-year-old firm will be greeted in some quarters with dismay, perhaps the bigger shock this morning is the news that Merrill Lynch sold itself to Bank of America for $50 billion in stock.While the sale of Merrill hadn't been mooted before the weekend, the Financial Times writes that CEO John Thain must have been watching events at Lehman Brothers closely and that he "told his top managers that, if Lehman fails, he would not repeat what in retrospect appears to be Mr. Fuld's biggest error: his refusal to sell part or all of the firm at what he considered a low-ball price."
Taken together with this year's absorption of Bear Stearns by J.P. Morgan Chase, the weekend's developments mean that three of Wall Street's five major independent brokers are effectively disappearing, leaving only Goldman Sachs Group and Morgan Stanley.
You can get a detailed report here
Coming to the Indian stock markets. We had a nasty fall today, but this could be just the beginning towards a journey to levels we had not imagined when the year began. I am talking of the sub 3000 levels for the Nifty. That's right, sub 3000!
Be ready for a downward journey in the days ahead, with a few days of respite.
Keep in mind this is from a traders point of view.
From an investment perspective, the India Story is still intact, and this fall will give another chance for those who missed the earlier bull run to acquire quality stocks at the right or discounted price.
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