Indian shares log second-steepest fall on US cuesMarch 17th, 2008 - 9:32 pm ICT by admin
Mumbai, March 17 (IANS) With no respite from worrying news from the US, Indian shares crashed Monday in tune with the global market bloodbath, resulting in a key index registering its second-steepest fall till date. The 30-share sensitive index (Sensex) of the Bombay Stock Exchange (BSE) opened at 15,326.93 points and notched a high of 15,326.93 before closing at 14,809.49 points to log a loss of 951.03 points, or 6.03 percent, at the day’s close.
It was the steepest fall for the Sensex - now at the lowest level since Aug 24, last year - after the 1,408-point drop on Jan 21.
The situation was no better at the National Stock Exchange (NSE), where the 50-scrip S&P CNX Nifty index, which opened at 4745.45 points, ended the day with a loss of 241.90 points, or 5.11 percent.
The Indian markets - already at the lowest levels in six months - also proved to be the worst performers in Asia, followed by Asian peers Hang Seng and Shanghai Composite.
Analysts attributed the fall to “panic reaction” after the unexpected collapse and impending sale of ailing US bank Bear Stearns and the US Federal Reserve’s emergency cut in its discount rates.
There was heavy offloading in important sectors like metals, capital goods, banking, realty, oil and gas, public sector undertakings and consumer durables.
“It’s total panic reaction. A lot of uncertainty still prevails among investors and nobody is able to gauge the panic in the system that is leading to such a drastic fall,” said financial analyst S.P. Tulsiani of S.P. Tulsian.com.
“Global concerns are weighing heavily on Indian markets,” he told IANS.
Sanat Dalal, a leading broker with Dalal Securities, said the markets were just reacting to news from abroad and conflicting statements emanating from the US were making matters worse.
“Last Wednesday, after Bear Stearns Bank made a statement to the effect that everything is fine, the markets reacted positively. Within two days it notched a gain of more than 400 points by Friday,” Dalal said.
“But barely two days later - that is today (March 17), when the same bank is up for sale, the markets have crumbled. What can be deduced from this?” he queried.
He added that the confidence of the investors was fast getting eroded with each passing day and its repercussions were being passed on to the market with devastating results, like today.
Another analyst Deven Malkan, who is also editor of Fortune India Magazine, felt that the worst was yet to come. “The present situation may turn worse if the US market continues its same trend,” he warned.
“More than the expected Federal Reserve Bank rate cut, the investors would be looking sharply at the steps to stabilize US dollar which is falling every day against other currencies,” he added.
Analysts were also of the view that unless the flow of bad tidings from the US markets ebbs, the Indian market will continue to react in a knee-jerk fashion.
They pinned their hopes on a support level at 13,000 points for the Sensex.
During the course of trading Monday, BSE’s mid-cap index, closed at 6,124.35 points and was down 459.10 points, or 6.97 percent, while the small-cap index closed at 7,522.23 points with a loss of 557.27 points or 6.90 percent.
The market breadth was extremely negative with low trading volumes. Only 282 shares advanced, compares with 2,404 that declined and 30 others that remained unchanged.
The list of biggest losers was led by ICICI Bank at Rs.757.40, down 13.76 percent, HDFC at Rs.2225.55, down 11.07 percent, Hindalco at Rs.164.85, down 9.20 percent and Jaiprakash Associates at Rs.208.05, down 11.94 percent.