Indian equities in red again on global nervousness (Lead)October 22nd, 2008 - 3:27 pm ICT by IANS
Mumbai, Oct 22 (IANS) Despite the Indian government still being in a denial mode claiming the global financial tsunami is just one more turbulence that the economy will weather, Indian equities markets by tanking once again Wednesday proved that the shivers going down the spine of Indian as well as global investors will not subside in a few days or months but may take a couple of years, analysts said.Mid-afternoon the benchmark 30-share sensitive index (Sensex) of the Bombay Stock Exchange was ruling at 10,281.99, down 401.40 points or 3.76 percent from its previous close Tuesday at 10,683.39 points.
“This downturn is not just an event or a war - it involves psychological and cultural issues - the very foundations of the global financial system has been shaken,” Jagannadham Thunuguntla, head of the capital markets arm of India’s fourth largest share brokerage firm, the Delhi-based SMC Group told IANS Wednesday.
The Sensex opened weak at 10,455.23 points, down 228.16 points or 2.14 percent from its previous close Tuesday, touched a high of 10,484.85 before sliding steadily.
At the National Stock Exchange, the broader 50-share S&P CNX Nifty index also showed a similar trend - opened weak, down nearly 50 points and dipped to shed nearly 150 points before beginning a weak recovery to reach 3096.05, still down 138.85 points or 4.29 percent from its previous close Tuesday at 3234.90 points.
Both midcap and smallcap stocks were also in the red reflecting a general nervousness pervading the market.
The BSE midcap index was at 3,516.23, down 71.01 points or 1.98 percent from its previous close Tuesday at 3,587.24 points.
The BSE smallcap index was at 4,129.69, down 66.59 points or 1.59 percent from its previous close at 4,196.28 points.
Even as Indian investors slept Tuesday night, the New York Stock Exchange and the Nasdaq - the market for technology stocks - witnessed paring of equity values once again after posting gains Monday.
Key indices of these markets lost 3.76 percent and 4.14 percent even as the three-month London Interbank Offered Rate (Libor), the interest rate banks around the world charge to lend funds to one another, fell to 3.83 percent Tuesday, according to the British Bankers’ Association in London.
The rate was down from Monday’s level of 4.06 percent.
The one-month rate dropped to 3.53 percent, from 3.75 percent, and the overnight rate fell to 1.28 percent, from 1.51 percent.
The Libor decline follows on the heels of the Bank of England’s move to lighten its lending rules and make it easier for banks to obtain financing: Banks can borrow overnight from the central bank at a rate of 0.25 percent over its interest rate, which is currently 4.5 percent.
The Indian central bank, the Reserve Bank of India (RBI) had also cut Monday its repo rate - the rate at which it lends to other Indian banks - by as much as 100 basis points to 8 percent from 9 percent earlier.
A similar disregard for central bank moves and government assurances and bail out moves was seen in Asian markets Wednesday morning even before the Indian markets opened.
The Nikkei, key equities index of the Tokyo Stock Exchange was down 6.79 percent Wednesday morning while the Hang Seng, key equities index of the Hong Kong Stock Exchange was down 2.86 percent.
There is simply no conviction and confidence among investors anywhere in the world, analysts said explaining why despite so many central bank and government level moves around the world including India, markets still remained jittery.