Equities in red, key index down 240 points (Lead)November 14th, 2008 - 4:45 pm ICT by IANS
Mumbai, Nov 14 (IANS) Despite opening strong, Indian equities markets were again in free fall mode Friday on weak global cues and mid-afternoon a key index had shed more than 260 points at its lowest point before inching up a bit but still more than 240 points in the red.Overnight US markets closed in the green but a key index of the New York Stock Exchange actually went even below Oct lows - below 8,000 - before bouncing back on short covering. Asian markets too were showing gains Friday morning when Indian markets opened.
“Markets opened strong as both US markets and Asian markets were in green but the buying mood is simply not there as it is very clear that even the Euro region is into a recession,” said Jagannadham Thunuguntla, head of the capital markets arm of India’s fourth largest share brokerage firm, the SMC Group.
Mid-afternoon the 30-share benchmark sensitive index (Sensex) of the Bombay Stock Exchange (BSE) was ruling at 9,293.82, down 242.51 points or 2.54 percent from its previous close Wednesday at 9,536.33 points.
The Sensex opened strong at 9,799.25, up 262.92 points or 2.76 percent from its previous close Wednesday, hit a high of 9,836.11 but then began to slide to hit a low of 9,267.49 before inching up a bit to its current value.
The broader-based 50 share S&P CNX Nifty of the National Stock Exchange (NSE) also showed a similar trend and mid-afternoon was ruling at 2782.55, down 65.9 points or 2.31 percent from its previous close Wednesday at 2848.45 points.
The BSE midcap index was ruling at 3,221.69, down 59.58 points or 1.82 percent from its previous close Wednesday at 3,281.27 points.
The BSE smallcap index was ruling at 3,771.06, down 42.32 points or 1.11 percent from its previous close Wednesday at 3,813.38 points.
All 13 sectoral indices were in the red with capital goods, automobiles, consumer durables and metal stocks showing the most losses.
“The US markets may have closed in the green but if a mature market shows 15 percent intra-day volatility then you know that the underlying sentiment is very weak and the bounce is only due to short covering,” Thunuguntla said explaining why Indian markets opened strong but immediately went into a tailspin.
“Germany, Europe’s largest economy, has just reported negative growth of 0.5 percent for the last quarter ending Sept and had reported negative growth of 0.4 percent in the previous quarter, so, going by the technical definition of a recession, they are into one,” Thunuguntla said.
Similarly, France, Europe’s second largest economy, has reported a growth of just 0.1 percent last quarter and had reported negative growth of 0.3 percent in the previous quarter, so they too are as good as in a recession, Thunuguntla said.
The world’s largest economy, the US economy, is already in a recession, so there are no positive cues from the global situation, he said.
“The writing is on the wall for such iconic representatives of American capitalism as General Motors and Ford because even if there is government help forthcoming and there is also a stimulus package they may survive for a few more months but not beyond that,” he said.
“Who will replace them is a trillion dollar question but the era of American capitalism as we know it is certainly coming to an end - old water is being washed away and new water will flow in,” Thunuguntla said, adding: “Till that happens uncertainty will rule and sustained recovery is not possible.”