Online edition of India's National Newspaper
Saturday, Apr 16, 2005

About Us
Contact Us
Business
News: Front Page | National | Tamil Nadu | Andhra Pradesh | Karnataka | Kerala | New Delhi | Other States | International | Opinion | Business | Sport | Miscellaneous | Engagements |
Advts:
Classifieds | Employment |

Business Printer Friendly Page   Send this Article to a Friend

Sensex crashes 219 points

Special Correspondent

Sharp fall in metal, oil, bank and tech stocks on the back of global slide The steep fall in Sensex is partly attributed to a lower than expected earnings guidance by Infosys for the current year.



MARKETMEN PERPLEXED: Stockbrokers watching computer monitors during trading in Mumbai on Friday. The key share index fell to a near-three-month low with tech shares leading the slide. — Reuters

MUMBAI: Aligning with global markets, the Indian stock markets crashed on Friday following a sharp fall in the metal, oil, bank and technology stocks. This is the biggest stock market fall since May 11, 2004, which took place in the aftermath of general elections.

The benchmark Bombay Stock Exchange 30-share sensitive index (Sensex) lost 219.58 points or 3.39 per cent, at 6248.34 and the 50-share NSE Nifty closed down by 69.15 points at 1956.30. From its all time high of 6954.86 touched in the intra-day trades on March 9, the Sensex has lost 606.52 points.

"It's not just India, It's not just Asia, It's a global sentiment", said Andrew Holland, Executive Vice President of DSP Merrill Lynch. The fall in the market was a "combination of negative outlook on global growth coupled with so many disappointments in U.S. like IBM's lower earnings guidance and general uncertainty over oil prices, rising interest rates and a low demand for commodities", said Mr. Holland. Further, low demand in commodities resulted in weakness in global metal prices.

While rest of Asian markets were down by 3 to 3.5 per cent, in this week, due to global negative outlook, the Indian markets were holding its fort, but fell sharply as the sentiment weakened by the tepid financial results of Infosys Technologies, a bellwether of the technology sector, which was below market expectations. Much to the surprise of the market, it also issued a lower than expected earnings guidance for the current financial year. It was a meltdown throughout the global markets, While the U.S. markets lost on Thursday 1.2 per cent, today Germany lost 1.6 per cent, France 1.53 per cent and the U.K. lost around one per cent. The Asian markets too recorded a fall today as Japan lost 1.7 per cent, Hong Kong one per cent, Singapore one per cent and South Korea 0.7 per cent.

Pointing to the future, Mr. Holland said, "We might see some more nervousness throughout the markets, but this probably a good opportunity to buy quality companies."

Inflation rate announced today also rose to 5.26 per cent for the week ended April 2 from 5.05 per cent in the previous week and well above market expectation of below 5 per cent.


This pushed up bond yields to a four month high of above 7 per cent, which is a pointer to the central bank to raise interest rates. Higher interest rates are bad news for stock markets as it will raise corporate costs and also discourage spending by consumers.

While index heavy weights contributed significantly to the fall of markets, the sector indices also lost heavily as BSE's Public sector index lost 118.13 points and its banking index lost 115.77 points. "It is in line with what is happening in the international market. As compared to other markets, this was a sudden fall. While Infosys results and guidance is not as bad as it is made out to be, I think it worked as a trigger", said Abhay Aima, Equity Head, HDFC Bank.

"While international factors continue to have an impact, one should not forget the domestic story which still looks pretty good. Basically there is no need to be panic.

"Most results will be in line with the market expectations. But in the current year one should not expect the same percentage growth as last year given that the base is much higher." Mr. Aima added.

Printer friendly page  
Send this article to Friends by E-Mail

Business

News: Front Page | National | Tamil Nadu | Andhra Pradesh | Karnataka | Kerala | New Delhi | Other States | International | Opinion | Business | Sport | Miscellaneous | Engagements |
Advts:
Classifieds | Employment | Updates: Breaking News |


News Update


The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2005, The Hindu. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu