Fallout of U.S. credit crisis
MUMBAI: Stock markets tumbled world over and in the domestic market the benchmark Bombay Stock Exchange (BSE) 30-share sensitive index (Sensex) nosedived by 654.32 points or 4.91 per cent to 12676.19 on global concerns over fallout from the U.S. credit crisis. The domestic markets are also nervous on the continuing political uncertainty at the Centre which caused heavy sell-off.
The NSE 50-share Nifty lost 178.60 points to close at 3661.10. Among the broader indices, BSE midcap lost 167.29 points or 3.14 per cent at 5163.51, smallcap 209.16 points or 3.15 per cent at 6430.90 and the BSE-500 lost 230.29 points or 4.44 per cent at 4956.47.
Banking stocks led the fall on Tuesday as the banking index, Bankex, lost 7.75 per cent followed by realty 5.44 per cent and metal 5.21 per cent. All other sectoral indices also closed in the negative territory, including IT, which lost 2.34 per cent.
The woes of U.S. credit market are continuing and nervousness threatens market stability after the government took over failed bank IndyMac last Friday. Further, the U.S. Treasury Department and the U.S. Federal Reserve announced steps to reassure markets that they support mortgage giants Fannie Mae and Freddie Mac. The share prices of these firms plummeted over worries about their exposures to delinquent loans, despite Washington’s plans to save these mortgage providers.
U.K.’s benchmark index FTSE has fallen nearly 20 per cent so far this year.
The FTSEurofirst 300 index of top European shares fell to its lowest since late May 2005 by mid-day on Tuesday as the outlook for the banking sector was negative. Japan’s Nikkei dipped by 2 per cent on Tuesday as banking shares took a beating on eroding investor confidence in the U.S. financial sector.
Hong Kong’s Hang Seng index lost 3.8 per cent to its lowest close in nearly four months on Tuesday. Other than fallout of the U.S. credit crisis, Asian markets are concerned about possible exposure of the region’s banks to troubled U.S. mortgage lenders.
U.S. Fed Chairman Ben Bernanke is due to present semi-annual monetary policy to the Senate Banking Committee on Tuesday, which would be overshadowed with credit woes of the U.S. mortgage companies and investment bankers as financial market turmoil has intensified.
Rupee drops 31 paise
The rupee lost 31 paise and closed at 43.24 a dollar amidst downgrading of the rupee by global rating agency Fitch and a collapse in stock markets.
At the interbank foreign exchange market, the rupee opened weak at 43.02/04 against Monday’s close of 42.92/93 and dropped further sharply to a low of 43.3050.