Sensex drops on global cues

Go down

Sensex drops on global cues

Post by sokul on Tue Jun 10, 2008 10:41 am

MUMBAI: Like the Mumbai rains, bad news for the investors poured in over the weekend and as a result markets reacted sharply on Monday. As investors sold from the word go, the BSE sensex crashed over 700 points in early trade but finally settled with a 506 points loss. Although the sensex closed just above the psychologically important 15K mark, at 15,066, market players feel there's more pain left for investors.

Last Friday, after the Indian markets closed, crude oil prices on the New York Mercantile Exchange went past the $139-a-barrel mark, an all-time record. This coincided with the US reporting its biggest monthly unemployment figure in 22 years. The two combined to pull the Dow Jones Index down by nearly 400 points at close of trading.

On the domestic front, inflation was at 8.24% and analysts predicting it was on its way to a double digit figure soon. This also raised chances of further tough measures by the government and the Reserve Bank of India, including raising key policy rates.

All these factors__domestic and global__combined and the sensex opened the day 417 points lower from its Friday close of 15,572. During the day it touched a high at 15,202 and a low at 14,846 and finally settled with a 3.2% loss. At the end of the session, investors were poorer by Rs 1.56 lakh crore with BSE's market capitalization now at Rs 49.35 lakh crore.

Market analysts feel although the sensex is now near its three-month low level and down 29% from its all time high of 21,208 reached in January this year, selling is yet to stop. ''Worst is not behind us and I expect selling by foreign funds would continue,'' said Arun Kejriwal, director, KRIS, an investment advisory firm. ''I feel selling by FIIs could stop around 13,500 level. This is the level at which most of the FIIs would not be in profit in their portfolio anymore and hence they would be reluctant to sell at a loss,'' Kejriwal added.

Data released by Sebi showed that FIIs have already taken over $4.5 billion out of the Indian stock market and if market players are to be believed this figure could only swell during the coming months.

Seen from the fundamental side, analysts believe the economy is slowing and the market could be bad for over a year from now. ''India's (economic) growth is under question. For the first time in the last four years a large number of companies have failed to meet analysts expectations,'' said Amitabh Chakraborty, president-equities, Religare Securities.

Number of posts : 28
Reputation :
0 / 1000 / 100

Registration date : 2008-06-03

View user profile

Back to top Go down

Back to top

- Similar topics

Permissions in this forum:
You cannot reply to topics in this forum