Equity markets start recovery after free fall (Third Lead)

September 15th, 2008 - 3:52 pm ICT by IANS  

SensexMumbai, Sep 15 (IANS) After panic selling throughout Monday morning, Indian equity markets began to recover early afternoon with “bottom fishing” or buying at the bottom by institutional investors.At around 1.30 p.m., the 30-share benchmark sensitive index of the Bombay Stock Exchange, the Sensex, had recovered by more than 130 points to 13,387.43, though it was still down 613.38 points or 4.38 percent from its previous close.

Earlier in the day it had fallen by over 750 points or about 5.4 percent.

“Panic selling seems to have stopped and there is bottom fishing by institutional buyers looking for cheap stocks at the bottom,” said portfolio strategist Manoj Krishnan of Delhi-based Price Investment Management & Research Services.

“I expect the Sensex to recover and end the day with only a 500-550 point loss,” he said.

The news that the Federal Open Market Committee (FOMC) of the US will hold a special unscheduled meeting Tuesday, for the first time in a decade, has also begun to boost sentiment in the New York Stock Exchange.

“The Americans will never let their financial system down and already the Dow Jones futures index has begun to recover from being 330 points down to just 278 points down now,” Krishnan said.

He said the FOMC meeting Tuesday should send out very positive cues and Indian markets would also recover by Wednesday.

By 1.50 p.m., the broader based 50-share S&P Nifty index of the National Stock Exchange also began to show signs of strong recovery.

It had recovered more than 54 points to 4,038.20, still down 190.25 points or 4.5 percent from its previous close Friday.

Earlier, it had fallen by 244.25 points or 5.78 percent to breach the 4,000 mark to 3,984.20 points as against its previous close Friday at 4,228.45.

The panic selling in the morning was sparked off not only by the serial blasts Saturday in the country’s capital New Delhi but also by news that the world’s fourth largest investment bank Lehman Bros had filed for Chapter 11 bankruptcy under US laws early Monday morning.

“The FOMC meeting should address this issue and is expected to send out positive cues,” Krishnan said.

The recovery spread to midcap and smallcap stocks as well.

At around 1.30 p.m., the BSE midcap index recovered to 5,236.36 points, down 300.78 points or 5.43 percent. Earlier in the day it had fallen by 322.75 points or 5.83 percent to 5,214.39.

The BSE small cap index too recovered to 6,344.92, down 366.62 points or 5.46 percent. Earlier in the day it had fallen by 374.95 points or 5.59 percent to 6,336.59.

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