The stock markets on Friday plunged with the BSE Sensex falling over 700 points during the day to dip below the 17000-mark on across-the-board selling by investors amid fears of recession in the U.S. and debt crisis in some Eurozone nations.
Recovering partially, the Bombay Stock Exchange 30-share barometer, which fell for the fourth straight day to touch a 14-month low, closed at 17305.87, down 387.31 points or 2.19 per cent, eroding investor wealth by Rs.1.33 lakh crore.
All the 13 sectoral indices recorded major losses with stocks of IT, metals, realty, financials, oil and gas and capital goods leading the fall.
The sentiment on the domestic bourses turned distinctly weak largely in tandem with overnight slide on the U.S. market on worries over a possible recession and concern over European debt, triggering widespread selling by major players including foreign funds.
Pranab seeks to calm market nerves
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 the U.S. and spread of the debt burden in Eurozone. Current volatility is temporary.”
The Securities and Exchange Board of India 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.
“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 Reserve Bank of India Deputy Governor K. C. Chakrabarty.
Investors have been selling stocks since the RBI hiked its key interest rate last week for the 11th time since March, 2010, to tame a stubbornly high inflation.
Worries over global economies going into slow mode added to investor woes the world over.
Asian stocks tumbled on Friday after a meltdown on Wall Street on Thursday, triggered by concerns that the U.S. economy might slip into recession. Key indices in China, Hong Kong, Japan, Singapore, South Korea and Taiwan ended down.
AP reports from New York :
Stocks mixed after a day of wild swings
Stocks are closing mixed after a day of whipsaw trading. The Dow Jones industrial average traded in a huge range of 400 points.
Investors are fearful that the debt crisis in Europe might infect banks there, roiling financial markets worldwide.
Stocks opened higher on Friday after the government said hiring picked up in July, but the gains were erased within 25 minutes.
The Dow closed up 61 points, or 0.5 per cent, at 11,445. The S&P 500 closed down a point, or 0.1 per cent, at 1,199. The Nasdaq composite index closed down 24, or 0.9 per cent, at 2,532.
The Dow fell 513 points on Thursday, the biggest loss since 2008.
