Real estate and banking stocks led the rout with ICICI Bank dropping 12% to its lowest in more than two years. IT stocks also plunged on fears that the global financial crisis will reduce software spends.
The Sensex fell 506.43 points, or 3.9%, to 12,595.75, the steepest since July 29. All but one of the 30 stocks in the benchmark index declined as it touched a one-and-a-half year low of 12,402.84 points during the session. The S&P CNX Nifty of the NSE slid 135.20 points, or 3.4%, to 3,850.05.
Investment guru Marc Faber told FE, I think market will move below 10,000 on the Sensex. He said he would wait before investing. Morgan Stanley said it has revised downward Indias GDP growth rate estimate to 6.4% from 6.9% for the year 2009.
The Indian currency fell to as much as 47.115 a dollar, the lowest since June 2003, before closing 0.9% down at 46.985. The rupee is the second-worst performer this year among the ten most-active Asian currencies, excluding the yen.
The rupee fell mainly on speculation that importers, especially oil marketers like Indian Oil Corporation, increased their dollar purchases to take advantage of a decline in oil prices. This will further accelerate the rupees fall, analysts feel. The price of crude oil for November delivery fell 4% to $102.6 a barrel on the New York Mercantile Exchange.
The market plunge came as news that Belgiums Fortis received a $16-billion bailout, and UKs Bradford & Bingley Plc was nationalised. Amitabh Chakraborty, president-equity at Religare Securities, said, The UK economy is a highly leveraged one. As the picture starts unfolding we might see some more pain for the financial markets across the globe.
Overseas investors sold a net Rs 604 crore worth of Indian stocks on September 29, increasing their net outflow this year from equities to $9 billion, Sebi said. The BSE Bankex lost more than 6% while the other sectoral indices fell between 2% and 5%. Nifty futures for October delivery fell 2.8% to 3,888. SBI slid to Rs 1,405.45, the lowest since August 29.
Citibank Global Research, in an earlier study, mentioned that the current turmoil in Asian markets is causing a lot of confusion. Confusion is high but actually investors know more than they thinkwe know that markets are a little below average on price to book value at 1.7x. From here we are close to a 50/50 probability of making money. We know that we are halfway through the period of multiple contraction; we know that 81% of stocks are trading below their 200-day moving average, a higher percentage than during 2001 or Sars, says the report. Ashok Chawla, secretary, department of economic affairs in the finance ministry, told agencies he did not expect any major dip beyond Mondays level.