Dalal Street?
Dalal Street (Hindi: Dalāl means a broker, or dealer) in downtown Mumbai, India is the address of the Bombay Stock Exchange(BSE) (in the Phiroze Jeejeebhoy Towers) and National Stock Exchange(NSE) and several related financial firms and institutions. When Bombay Stock Exchange was moved to this new location at the intersection of Bombay Samāchār Marg and Hammam Street, the street next to the building was renamed as Dalal Street.
Wall Street?
Wall Street is a street in lower Manhattan, New York City, New York USA. It runs east from Broadway downhill to South Street on the East River, through the historical center of the Financial District. Wall Street was the first permanent home of the New York Stock Exchange; over time Wall Street became the name of the surrounding geographic neighborhood. Wall Street is also shorthand (or a metonym) for "influential financial interests" in the U.S., as well as for the financial industry in the New York City area.
Several major U.S. stock and other exchanges remain headquartered on Wall Street and in the Financial District, including the NYSE, NASDAQ, AMEX, NYMEX, and NYBOT.
The Effects of Wall Street on Indian Market:
The current rise and fall of the capital markets (measured approx by the SENSEX) at the Dalal Street makes it necessary to look at the American economic strategy formulated post the 1930 depression to cushion the US economy from jolts of economic cycles. Every occupant of the White House has, since then, supported the broad principles of this theory. It concerns about creating buyers and purchasing power in the Third World countries so that produce of the American industries is not short of buyers even when the domestic demand falls as a result of natural economic cycles.
In the bygone era the US government’s financial assistance to the least developed countries (LDC) was an attempt to do this. The method that is in vogue is to aggressively pursue the governments of the less developed countries to implement the policies of free market economy and opening up of the capital markets and at the same time assiduously selling these concepts to the masses through the multi-trillion dollar media machine.
In the recent times India has been a classic example of this economic disease and shows every symptom associated with it. Every time an American fund invests a dollar in our market the hype is created convincing us that it reflects the confidence reposed in our economy by the West. Unfortunately, we swallow not only the bait but the dangerous hook too. We bend backwards to ensure that the so-called foreign investment keeps trickling in. Our Finance Ministers begins to loose sleep over the net outflows of the FII (Foreign Institutional Investor) investments. We gave them all. They did not like the “badla” system that we are adept at so we too condemned it and brought in “futures, options and derivatives” – a colonial cousin of the same system that they were too familiar with.
The fact is that the American and other funds in the West and in the Japan are constantly looking out for a manipulative market where they could quickly make some money and take it back in time to invest in their own countries. Indian capital market is far from statistical efficiency that a market needs to enjoy its natural stability. This is because the size of our markets in terms of money as well as number of players is too small for any inherent econometric forces to play. As a result, a couple of billion dollars of investment (or dis-investment) is enough to fire a bull (or bear) run on the market and that is exactly what the FII's are looking for – a temporary hedging place to park their monies. As a solution to this, the champions of this system seek to educate the people and persuade them into investing in the capital market. This too goes in the favour of our cousins in the West. It is like whipping up more cream for others to pick.
What is so different between the “Wall Street” and the “Dalal Street” that the former is a technically efficient market and we are easily vulnerable to the manipulation? Simply put, it is because it is their system and we never really had our own. Let me elaborate on this. A farmer is Australia brushes his teeth with Colgate drives his pickup truck to a shell station, drinks Pepsi (or coke) and smokes Marlboro eats stake and drinks beer in a can. He goes to see his aunt in the US he sees people in the countryside doing the same, speaking the same language and discussing same problems; he goes to Ireland to visit his sister and it’s a same thing all around. When he lands in India as a tourist he suddenly finds a changed scenario: the cars look different, the gas stations look different, cigarettes taste different, croissants are vague and bread does not feel the same. He enjoys India as a change, he loves our “garlic nan” and swears by its taste but in the corner of the mind he knows its not “us” its “they” and when it comes to parting with the money no one likes to give it to a stranger.
Therefore, when he gets “bumper crop” and has his session with his investment agent he would want his money with the familiar names; the Coke, Pepsi, Colgate, Microsoft and Ford. You say Wipro, Infosys or emerging market he smirks. He is happy to put it his bets on the Wall Street though he is fast asleep when the markets open in NY. These people all across the world, which Wall Street once nicknamed as “Small American”, grant the NYSE the strength and stability it enjoys despite several scams that rocked it from time to time. Markets do rise and fall in the all parts of the world. NY, London or Zurich is no exception.
The difference is that their markets behaviour is in synch with what is happening around. With us it is chaotic. As we witnessed in past couple of years markets continued to rally though the inflation went up, fuel price reached unprecedented high, the terrorist threat to the country increased and above all for the first time the paucity of “electric power” became acutely evident. The only thing going for India was a big boom in telecom industry and huge part of the credit for this goes to Lalu Prasad Yadav (surprised!) and his Railways that caused the “bandwidth” availability in the country to rise exponentially.
Somewhere we have got impatient. We seem to forget that the West too took its time to reach economic maturity that they enjoy today. We have a long way to go and there are no short cuts. We have to first see that the goods manufactured in India find their firm place on the global shelf (like the Japanese did). Without such strong foundation if we act in a hurry it would be too late to reverse and change course. Even seemingly informed people seem to think it would be a good idea to invite Wal-Mart to India and we seem to think that our retail trade will not be affected. That is being naïve. Anyone who knows Wal-Mart knows that its not just a chain of stores, it is cult and a strong cartel. Once we open our doors to this monster we can only be awed by its aggressive measures. It not only has capacity to put our retail business in jeopardy but as Indian manufactures vie to put their products on its shelf it can squeeze them off the last penny of profit and render them incapable of competition. My concern in this area may sound exaggerated but it cannot be ignored that if East India Company was a symbol of orthodox colonialism then Wal-Mart is a symbol of neo-colonialism.
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