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Markets in bear grip

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Oommen A. Ninan

Sensex tanks 696 points; longer U.S. recession feared

MUMBAI: Equity markets came under a severe bear grip on Tuesday as the Bombay Stock Exchange benchmark index, Sensex, closed below the psychological 10000-mark, once again, as ebullience about China’s $586 billion stimulus plan fizzled out.

The bull-run lost steam after two successive sessions — last Friday and Monday — which witnessed low turnovers.

This was a clear indication that the rally was not sustainable, market participants felt. Further, worrying corporate news from the U.S. and suggestions that the recession will be longer and deeper than earlier thought are adding up to the downside on market places.

The Bombay Stock Exchange 30-share sensitive index lost 696.47 points or 6.61 per cent to close at 9839.69 against the previous day’s close of 10536.16.

The Sensex opened weak at 10405.39, down 130.77 points or 1.24 per cent from its previous close and continued to fall to hit an intra-day low of 9799.45 before closing at 9839.69.

The broader-based 50 share S&P CNX Nifty of the National Stock Exchange closed at 2938.65, down 209.6 points or 6.66 per cent from its previous close of 3148.25.

In the U.S., two more commercial banks went bankrupt last Friday bringing the total number of bankrupt U.S. commercial banks to 19 apart from the investment banks that declared bankruptcy. Meanwhile, in Europe, D. Carnegie & Co. AB, the 205-year-old Swedish investment bank, had its licence revoked on Monday by the country’s regulator and will be put under supervision of the national debt office.

Rupee plunges 73 paise

PTI reports:

Snapping its two-day gaining streak, the rupee on Tuesday fell by a huge 73 paise to 48.11/12 against the greenback as the sluggish equity markets weighed heavily on the domestic currency and oil refiners bought dollars to meet their import requirements.

At the interbank foreign exchange market, the rupee resumed sharply lower at 47.63/64 and moved in tandem with the stock markets in a range of 47.45 and 48.15. Later, it slipped further downwards and settled at 48.11/12, registering a steep fall of 73 paise or 1.54 per cent over the previous close of 47.38/39. Although China had on Sunday announced a bailout package of $586 billion to mitigate the impact of global credit crisis and to spur expansion in the world’s fourth largest economy, the lingering global recession kept the stock markets bearish across the globe on Tuesday, affecting sentiment.

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