The trend in the stock market has reversed ever since the US financial bubble burst and stock prices of most Indian companies have fallen sharply ever since. As a result their ability to raise more money using shares has gone down as well.

Also, banks are not too willing to lend money to corporates. They do lend now but at a very high rate of interest. So companies are not in a position to rasie cheap capital (money) by selling their shares to private investors as well as to the public.

So in a way, the fall in value of most indices on the Bombay Stock Exchange, indicate bad times ahead for companies.

Take for instance the companies that produce metals like copper, steel and aluminium that form the BSE Metal Index -- the biggest loser. Ever since the global financial meltdown began on September 15 this index has shaved off 40.53 per cent till October 16.

BSE Index	As on Sep 15	As on Oct 16	Loss (in per cent)
Metal	10,390.84	6,179.87	-40.53
Realty	4,334.52	2,813.26	-35.10
IT	3,596.83	2,669.17	-25.79
Power	2,435.07	1,863.01	-23.49
BSE Auto	3,880.57	3,195.91	-17.64

Investors now fear that in case of a severe recession there will be a sharp drop in demand for raw minerals and metals iron ore, steel, aluminium and copper. This in turn will force the companies to cut down on their expansion and production. If this were to happen on a large scale most of the factories would not need as many workers and employees as they have now.

Expect a slowdown in this sector and the resultant layoffs in this industry if the winds of recession turn into a gale.

Photograph: PAL PILLAI/AFP/Getty Images

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