Greenspan effect; bourses turn red

Mumbai, May 24 | Updated: May 25 2007, 07:08am hrs
The concern raised by former US Federal Reserve chief Alan Greenspan, on Chinese markets unsustainable gains and its probability of eventual declines, send shivers down the global markets including Indian bourses. The 30-share Sensex of the Bombay Stock Exchange (BSE) was down by 145.15 points or 1.01% to close at 14, 218.11 points. The broader index S&P CNX Nifty of the National Stock Exchange (NSE) lost 41.30 points 0.97% at 4,204.9 points.

Speaking to a conference in Madrid by satellite, Greenspan predicted a dramatic contraction in Chinese share prices that would spread to other markets. China is the worlds fastest-growing economy and the benchmark Shanghai Composite Index has tripled in last one year.

Following this remark, the Shanghai Composite was down by about 0.54% or 22.58 points at 4, 151.13 points on Thursday.

The Dow Jones Industrial Average, which had earlier hit a new high of 13,609, slipped back to 13,525 a 14-point drop on the day. While the other European stock markets too felt the heat. Suni Jain, derivatives analyst, Edelweiss Securities said, As the F&O open interest is nearing its all time high levels, there is a fear of market correcting in the coming days as we havent witnessed hectic profit booking at any levels throughout this rally.

Among the domestic stocks, Tata Steel was the top loser, down 4.14% or Rs 27.30 to Rs 631.60. RBIs fiat halting fresh FII investment in Tata Steel after it reached the permissible limit of 22% was the major reason for prompting profit booking in the counter, dealers said.