The benchmark index plunges by 900 points
Bourses take a cue from global slide
MUMBAI: It was black Monday once again for stock markets as benchmark Sensex melted to record its second biggest fall of over 900 points in BSE history and closed below 17000 level as the already dim global situation gave further signs of worst feared recession in the U.S.
The markets had similarly plummeted on January 21 and 22 as well as on February 11 this year on fears of a possible recession in the U.S., the world’s largest economy, owing to the credit crisis which is still lingering on.
The sub-prime crisis in the U.S. had shaved off more than 2000 points from the BSE barometer on two days on January 21 and 22, leading to a massive erosion of over Rs. 6 trillion in investors’ wealth.
The Bombay Stock Exchange 30-share Sensex on Monday settled the day at a two-week low of 16677.88, a fall of 900.84 points, or 5.12 per cent, from its last close.
Stocks melted in the first trading day after the presentation of Union Budget, which has proposed to hike the rate of short-term capital gain tax and massive Rs. 60,000 crore relief package for farmers.
The fall incidentally coincides with the Finance Minister P Chidambaram’s defence for Rs. 60,000 crore farm bonanza while showing concerns over rising food prices, which he said, has become an inflation threat. Brokers said a hike in the short-term capital gains tax and a proposal to waive farm loans were the bone of contention among the market fraternity.
Marketmen said the bourses took a cue from global slide, largely due to increasingly weak U.S. economic data that fuelled fears of the U.S. recession. HSBC announced higher-than-expected bad debts related to the U.S. housing market, indicating writedowns by world banking sector due to the credit crunch.
Besides, dollar touched record lows against its major rivals, strengthening fears of a slowdown and possibility of a rate cut by Federal Reserve.
Asian indices tumbled by about 2 to 4.5 per cent and European markets traded lower by 1.5 per cent this afternoon following a sharp fall of about 2.5 per cent in Wall Street last weekend.
The National Stock Exchange’s S&P CNX Nifty dived by 270.50 points or 5.18 per cent to close at 4953.00 from its previous close of 5223.50.
The market breadth was extremely negative as 2333 stocks closed with sharp to marked falls against only 393 gainers on the BSE. The broad-based BSE-100 index dropped by 497.75 points or 5.29 per cent to 8907.23 from last close of 9404.98. — PTI