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Sensex falls to 2-yr low over recession fears
Published on Mon, Oct 06, 2008 at 14:46, Updated on Mon, Oct 06, 2008 at 19:05 in Business section
Tags: Indian Stock Market, Sensex , Mumbai
GLOBAL TUMBLE: The US market meltdown has had a cascading effect in markets worldover
Mumbai: The BSE Sensex fell below 12,000 points for the first time in more than two years on Monday.
The fall came as concerns grew of acceleration in foreign fund withdrawals amid fears the credit crisis would lead to a global recession.
More European governments offered blanket bank deposit guarantees as regulators from Washington to Seoul scrambled to contain the deepest financial crisis in 80 years.
But the flurry of measures failed to reassure investors as stocks in Asia Pacific outside Japan dropped more than 6 per cent to their lowest in nearly three years.
The market fell as much as 4.57 per cent to 11,953.53 on Monday, lowest since September 20, 2006.
"Money is very dear and all assets across the globe are correcting. Indian equities are no exception," said the head of research at Dolat Capital, Sanjeev Patkar.
"Investors are realising it is better to sit on cash."
At 1:05 pm, the 30-share BSE index was down 3.8 per cent at 12,050.55, with all but one component falling.
The index has lost more than 40 per cent in 2008, and net selling of $9.4 billion by foreign funds has been a key factor.
The 50-share NSE index was down 3.8 per cent at 3,672.80, its lowest in 18 months.
"International headwinds are the main factors here," said the president for equities at Religare Securities, Amitabh Chakraborty.
A domestic liquidity crunch and slowing economy were adding more pressure to the fall, and he expected the index to slide towards 9,000-10,000 by the end of 2008.
Outsourcers, who count global financial firms among their top clients, led the fall on fears of drastic cuts in technology budgets.
The sector index was down 6 per cent. Bellwether Infosys Technologies fell 6.2 per cent to Rupees 1,304.90; top outsourcer Tata Consultancy Services dropped 6.1 per cent to Rupees 616.70.
Tata Steel dropped 8.5 per cent to Rupees 360.85 on a view lower demand would see prices fall, and after several brokerages cut their rating on the stock.
Sterlite Industries fell 11.4 per cent to 350.90 rupees after metal markets in Shanghai fell by their 4 per cent limit after week-long holidays following a turbulent week that saw London copper record their biggest ever weekly fall.
Financials fell on weak sentiment for the sector globally and on concerns of slowing growth at home.
Biggest private sector bank of the country, ICICI Bank fell 3.9 per cent to Rupees 484.85, and top mortgage lender Housing Development Finance Corp fell 3.5 per cent to Rupees 2,009.
The sector-index dropped 2.9 per cent.
Two newspapers reported on Monday that the capital market regulator was set to ease some restrictions on foreign portfolio investment to help revive capital inflows.
Traders said the move was unlikely to stem the outflow of funds because of the global financial troubles.
In the broader market, losers swamped gainers in the ratio of 7 to 1 on volume of 108.1 million shares.
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Most of the people who have invested have realized that their money is going down the drain.
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Sensex stabilises below 10K.
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