The Hindu : Front Page : Sensex loses 615 points

Online edition of India's National Newspaper
Thursday, Aug 02, 2007
ePaper

Front Page

Front Page

Sensex loses 615 points

Special Correspondent

Realty index takes a hit; U.S. Asian markets suffer setback

MUMBAI: In a major shake-up on stock exchanges, the benchmark Sensex lost 615.22 points to end below the 15000-mark. The meltdown in the Indian stock prices on Wednesday was attributed to negative news flow on sub-prime mortgage — which related to realty markets — worries from the U.S. While Asian markets witnessed a sharp fall in their indices, India’s Realty index was the worst hit, which was down by over 6.64 per cent and selling was seen in scrips across sectors.

The Asian markets also ended in the negative territory between 3 per cent and 4 per cent. Taiwan saw the highest fall and was down by 4.3 per cent followed by Shanghai Composite, Seoul Composite, Jakarta Composite, and Singapore’s Strait Times. European markets also opened in the red, CAC and DAX were down nearly 2 per cent each.

“Global markets are re-allocating the funds from the riskier asset classes. For the last two to three years there has been an increase in the risk capital. The worst is not yet over for the Indian markets,” said Sunil Shah, Managing Director, HDFC Securities.

The NSE cash turnover was at Rs. 12,640.07crore and the NSE Futures and Options turnover was at Rs. 55,904.92 crore. The BSE cash turnover was at Rs. 6,634.82 crore.

Realty stocks are the hardest hit sector on Wednesday’s fall. The BSE Realty Index opened at 7748.29 and touched an intra-day high of 7748.29 to close the day at 7332.51, down by 521.54 points, 6.64 per cent from its previous close of 7854.05. It touched an intra-day low of 7306.98. DLF, HDIL, Peninsula Land, Unitech, Sobha Developer, Indiabulls Real and Parsvnath were deep in the red.

“High leverage, which provided much of the impetus for the large property company deals in the last few years, has lost its sheen, given the cracks in the sub-prime mortgage market and its attendant securitisation market.

Tougher loan standards, and the retreat by large investment banks from the sub-prime market, have put a brake on the hyper aggressive deals,” stated a note released by Standard & Poor’s (S&P), a leading global rating agency on Wednesday.

The total size of property deals in the U.S. dropped dramatically in the second quarter to $ 6 billion, from over $ 29 billion in the first quarter.

“The contagion spread globally with property markets taking hits in Europe and Asia. While 12-month returns still remain double digit across all global regions, year-to-date returns for several regions have gone into negative territory with this quarter’s sell off,” S&P added.

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

Front Page