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Mumbai, Jun 9: Equities traded almost at their January 2008 lows on yet another manic Monday, as weak cues from US markets, which plunged on Friday as jobless data and surging crude prices spooked investors. Indian stock markets fell the steepest among their peers.
The BSE Sensex lost 506.08 points, or 3.25%. The bellwether index opened lower and touched its nadir at 14,846.18 points. This was the third lowest in any day this calendar year, off by just 168 points from the 14,677.24 points reached in March.
The 30-share index, however, managed to close above the psychological 15k mark at 15,066.10 points.
The broader S&P CNX Nifty of the NSE lost 126.85 points, or 2.7%, before touching a new intra-day low of 4,411.60 points since January.
Nilesh Jasani, head of research at Credit Suisse Securities, said, “The market has not factored in the effect of lower earnings by companies. We are yet to see single-digit growth (by Indian companies). And there is a lot of confusion caused by the high oil prices and also by the currency depreciation. The crowding out of government spending towards managing inflation is another factor.”
Credit Suisse sees the Sensex at around 13k-levels by year-end. Market players attribute the market plunge to sustained selling pressure by foreign institutional investors (FIIs). Data compiled by Sebi show FIIs in the first six months of 2008 were net sellers for the first time in many years. They sold equities and debt papers worth $4.6 billion.
The Dow Jones Industrial Average was down by 3% on Friday. Among other Asian markets, Japan’s Nikkei lost around 2% and South Korea’s Kospi 1%, while Hong Kong’s Hang Seng ended with a marginal gain of 0.66% on Monday.
Indian markets, which were upbeat on robust corporate earnings, seem to have dithered, as many companies witnessed a margin squeeze due to higher input costs and ever-looming interest rate hikes by RBI, severely denting their earnings.
Amar Ambani, vice president-research, India Infoline Ltd, said, “Expectations of slowing economic growth, widening deficits, depreciating currency, high inflation and a rise in interest rates describe the current macro economic environment of India. The defeat of the ruling alliance in key state assembly elections and its inability to balance growth and inflation are clear harbingers of upcoming political uncertainty. There is no astonishment as to why we are witnessing huge portfolio outflows from India. This, along with disappearing retail investor participation, has been pushing the...
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