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Friday Frenzy At Dalal Street

PTI 05 Aug 2011, 19:21:39 IST

Mumbai, Aug 5: The BSE Sensex tanked 700 points today before recovering somewhat to close at 14-month low of 17,306, down 387 points, on panic selling as fears of possible recession in the US and acute debt problems in the euro zone gripped investors the world over.

Finance Minister Pranab Mukherjee sought to calm market nerves saying, “This is nothing domestic. It is substantially due to external factors. Stock markets fell due to global factors like weak recovery in US and spread of debt burden in Eurozone. Current volatility is temporary.” After losing over 620 points in the last three sessions, the Bombay Stock Exchange 30-share index, Sensex, plummeted by another 387.31 points, or 2.19 per cent to 17,305.87, the levels last seen on June 10 last year.

All the 13 sectoral indices recorded major losses with stocks of IT, metals, realty, financials, oil and gas and capital goods leading the fall.

Sensex blue chips RIL, Infosys, ICICI Bank, ITC and Sterlite lost 3-7 per cent.

Similarly, the broader NSE 50-issue Nifty plunged 120.55 points or 2.26 per cent to close at 5,211.25 -- the level not seen since June 14, 2010, when it had closed at 5,197.70. Market regulator Sebi said it was watching the situation closely. “... And our belief is that everything is perfect and right in our market. There is nothing for the people to worry,” said Sebi Chairman U K Sinha.

“Our risk management system is working perfectly. All the settlements are taking place,” he added. The Reserve Bank said, on the other hand, that India will have to learn to live with volatility in the global economy.  “Markets go up and down because of various factors. We don't go into this. Situation is becoming more complex and volatile by the day. So you have to live with that,” said RBI Deputy Governor K C Chakrabarty.

Investors have been selling stocks since RBI hiked its key interest rates last week for the 11th time since March, 2010 to tame stubbornly high inflation. Worries over global economies going into the slow mode added to investor woes the world over.

Asian stocks tumbled after a meltdown on Wall Street, triggered by concerns that the US economy might slip into recession. Key indices in China, Hong Kong, Japan, Singapore, South Korea and Taiwan ended down by 2.15 per cent to 5.58 per cent. European markets too were down in afternoon deals. The CAC was down by 0.34 per cent, the DAX by 1.73 per cent and the FTSE by 2.18 per cent.

In the US, Dow Jones and Nasdaq had slumped by 4.31 per cent and 5.08 per cent yesterday, biggest falls in over last two years.

Back home, FIIs sold shares worth Rs 254.55 crore yesterday as per provisional data, after pulling out Rs 801.10 crore on August 3, affected market sentiment. Overall, 27 of the 30 index-based counters ended in the red, while others closed with small gains. REL Infra was the top loser with a fall of 7.43 per cent. RCom, Sterlite, Tata Steel, Infosys, Jaiprakash Associates, BHEL, TCS, DLF, M&M, NTPC, ICICI Bank, Tata Motors, RIL, Wipro, Bharti Airtel, ITC, HDFC and SBI lost 7.43 per cent to 1.09 per cent. All 13 sectoral indices closed between 3.93 per cent and 1.15 per cent.

The total market breadth at BSE was sharply negative as 2,364 shares closed with losses, while only 557 finished with gains. The turnover improved further to Rs 3,364.70 crore from Rs 2,949.08 crore yesterday. PTI