Mirroring the global trend, key Indian equity indices plunged by more than 3% on Friday after the $700-billion US bailout deal was stalled over differences between the Democrats and Republicans on Thursday. The rupee too fell, losing 1.5% of its value against the dollar this week at 46.5475. The rupee has declined for the seventh successive week, the longest stretch in two-and-a-half years.
The rupee has slipped by 5.6% in September, making it the rupees? worst month since the Asian crisis of 1997. But the rupee?s depreciation?rather the dollar?s appreciation?had swollen RBI?s foreign exchange reserves by $2.5 billion. The reserves, the central bank said, have risen to $291.97 billion, despite foreign institutional investors pulling out a net $115.70 million this week and $9.067 billion so far this since January 1.
The markets cartwheeled in response to the developing global financial market crisis. JPMorgan Chase on Thursday bought the troubled Washington Mutual Bank after federal regulators seized it, marking the biggest bank failure in the United States.
The bellwether Sensex of the Bombay Stock Exchange (BSE) moved downhill the entire trading session, losing 445 points or 3.28% before ending the day at 13,102.18 points. The wider S&P CNX Nifty of the National Stock Exchange (NSE) breached the 4k-mark, ending at 3,985.25 points posting a loss of 125.30 points or 3.05% for the day.
Alex Mathew, head of research, Geojit Financial Services, said, ?Market remained weak on global cues and on the news of the collapse of Washington Mutual Bank. This exacerbated our market slide. A lot of stocks started trading below their respective 200 daily moving averages or their respective yearly lows, sending weak market undertones. The market participants who bought capital good sector stocks ahead of Indo-US nuke deal also started dumping them, because of weak trends.?
Barring the defensive FMCG sector stocks, all sectoral indices took a hit. The real estate sector led the rout, as the BSE Realty lost more than 6%. The BSE Metal Index, BSE Bankex and BSE Capital Goods all fell by more than 4%.
US stocks surged on Thursday boosted by reports that the US Congress had reached an in-principle agreement on the $700-billion plan to buy bad debt from banks. The Dow Jones industrial average jumped 196.89 points, or 1.82%, at 11,022.06.
However, later developments sank stock markets across the Asian region, sending the ripples across the Indian markets. Weak US economic data also weighed on market sentiments; US-made durable goods fell by 4.5% in August 2008, while sales of new homes in the dropped 11.5%.