The Hindu : Business : Sensex crashes 540 points in volatile trading

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Saturday, Jul 28, 2007
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Sensex crashes 540 points in volatile trading

Oommen A. Ninan

The turmoil in the U.S. market has led to a contagion effect on other bourses including India

— PHOTO: PAUL NORONHA

CONTAGIoN EFFECT: An investor in pensive mood looks at the giant screen (not in picture) put up at the Bombay Stock Exchange showing the Sensex crash in Mumbai on Friday.

MUMBAI: Amid high volatility, on extreme weak global cues, the domestic stock market tumbled by 541 points on Monday.

The benchmark 30-share sensitive index (Sensex) lost 541.74 points or 3.43 per cent at 15234.57 and the 50-share Nifty closed at 4445.20, down 174.60 points or 3.78 per cent.

“This is not yet over. Till the time the global risk appetite is fully restored we may have some period of uncertainties,” said Sanjay Sinha, Chief Investment Officer, SBI Mutual Fund. “No visible risks which are specific to India. However, most of the global markets are trading at their all time high and therefore any negative news lead to correction in the market,” said Mr. Sinha, adding, “the sharp appreciation of yen in the last two weeks has rekindled the fear of yen carry trade unwinding and therefore Indian markets have corrected in line with the global correction.”

Metal and realty stocks were the biggest losers. The BSE Realty Index on the eighteenth day after its launch opened at 8074.18 and touched an intra-day high of 8074.18 to close the day at 7823.91, down by 433.57 points, 5.25 per cent from its previous close of 8257.48. It touched an intra-day low of 7675.64. “The problem is external and not internal as the turmoil in the U.S. market has led to a contagion effect on other markets, including India,” said Tridib Pathak, Chief Investment Officer of Lotus India Asset Management Company. According to him volatility will continue in the short term depending on the global situation.

Chronology of falls

PTI reports:

In terms of percentage, the Sensex on Friday fell by 3.43 per cent. While the fall of826.38 points on May 18, 2006, is widely known as the biggest ever plunge for the Sensex, in percentage terms it was only seventh biggest at 6.76 per cent and occurred at a time when market was trading over 12000-level.

The biggest ever fall so far in percentage terms occurred on April 28, 1992, when the index fell 12.7 per cent or 570 points. The second biggest was on May 17, 2004, when the Sensex slid 11.14 per cent. It was a fall of564.71 points, the fourth biggest in absolute value terms, and took place when the Sensex was trading just above 5000-level.

The third biggest percentage fall was of 8.3 per cent on April 4, 2000, and 6.9 per cent on April 17, 1999, all ofwhich took place when the market was trading below 5000-level. The bear attack on the bourses on Friday left investors poorer by over one-and-a-half a trillion rupees with more than Rs. 70,000 crore losses being incurred by shareholders in 30 blue chips.

Stocks witnessed a free fall as investor sentiment was beaten down by weak global markets, mainly the U.S., whose dull housing market triggered the worst sell-offs in America since February.

Continued over the credit markets after housing and deteriorating conditions for corporate buyouts took its toll on Wall Street on Thursday. The Dow Jones Industrial Average fell 311.50 points, its largest one-day point decline since February 27. The Nasdaq Composite Index dropped 48.83 points.

In Asia, the Hang Seng slumped by 641.28 points, Nikkei by 418.28 points, Singapore ST by 87 points, Kospi by 90.32 points and Taiwan Weighted by 404.14 points.

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