Sensex Loss of 7.4% Leads Asian Fall

123jump.com Staff
21 Jan, 2008
New York City

Mumbai witnessed one of its worst one-day losses on dearth of buyers, net selling from international investors, and rising worries that global economic slowdown will hurt corporate profits. Small and mid cap stock indexes on the BSE fell nearly 12%. CNX Nifty index of 50 stocks fell nearly 9%. The sell-off was widespread with every member in the Sensex falling. Relinace Industries plunged 9%. ICICI Bank dropped 6% after reporting 35% rise in earnings. European markets faced sell-off.

[R]9:00AM New York, 7:30PM Mumbai – The decline in Sensex led the global market sell-off.[/R]

Sensex in Mumbai trading fell sharply on global economic worries, lack of fresh capital after the closure of Reliance Energy IPO, and lack of clear direction from the U.S. financial markets.

Sensex of 30 stocks fell 7.41% or 1,408.35 to close at 17,605.35 after falling as much as 2,062.22 or to 16,951.50. The sharp decline in the market averages was precipitated by a selling from international investors, lack of buying from retail investors and worries that U.S. is already in the recession.

CNX Nifty index of 50 stocks fell 8.7% or 496.70 to 5,208.80.

Small and mid-cap stocks fell the most in the today’s decline. BSE mid-cap index fell 11.4% and small cap index declined 10.3%.

After today’s decline, Sensex is now down 17% from its peak of 21,206.77 on January 10, 2008.

International investors sold 3,300 core rupees of stocks and local mutual fund companies purchased 3,399 crore rupees of stocks. Reliance Power Ltd IPO was oversubscribed 72 times, sucking the capital from the market, just at the time when markets were falling.

Every member of the 30-stock index in Sensex index declined. Of the stocks traded on BSE, 2,658 closed lower, 140, gained and 14 were unchanged.

Stock trading turnover on BSE was estimated at 9,299 crore rupees compared to 8,801 crore rupees on Friday. Trading on NSE was recorded at 24,525 crore rupees compared to 19,884 crore rupees in Friday’s trading.

U.S. market indexes have fallen nearly 10% in 2008 on the larger than expected losses in banks and brokerage companies and continued uncertainty related to the health of the financial system and housing market. President Bush’s economic stimulus was widely perceived failed to convince global investors that the U.S. can avoid a recession.

Asian markets closed sharply lower as well. Hong Kong and Indonesia fell 5.5%. Japan declined 4%, Korea, Thailand, Australia, and Philippines lost more than 2%.

Japanese regional economy survey showed a slowing economy, Bank of China is likely to write-off its assets in riskier loans in America, and the European Central Bank may have to revise its view on increasing interest rates.

The talk of decoupling of Asian economies from the U.S. were quickly put aside today and investors were only concerned with the depth and the length of the U.S. recession.

After the market closed in Mumbai, the European markets fell sharply as well. Germany and Spain fell more than 7% and France and UK declined more than 6%. Switzerland lost more than 5%. German bank West LB and Commerzbank warned that their sub-prime loans related losses could be twice the previous estimates. Commerzbank fell more than 7% and Deutsche Bank declined 6%.

In Mumbai trading Reliance Industries fell 9% to 2,544 rupees and ONGC lost 8% to 1,114 rupees.

ONGC reported net sales decline of 1.75% to 15,983 crore rupees and earnings fall of 6.5% to 4,366 crore rupees

ICICI Bank fell 6% to 1,173 after reporting a profit rise of 35% to 1,230 crore rupees in the third quarter ending in December.

Bharti Airtel fell 5% to 828 rupees and Reliance Communication dropped 14% to 605 rupees. Idea Cellular fell 12% to 120 rupees.

Satyam Computers gained 4.7% to 390 rupees after it reported 29% rise in net income to 433 crore rupees on 36% increase in net sales to 2,266 crore rupees.

ACC, cement maker, fell 15% to 739 rupees, NTPC declined 15.2% to 203 rupees, and Bajaj Auto plunged 15.2% to 2,064 rupees.