The Hindu Business Line : Global indices do a nosedive; bank scrips fall 7.75%

The Indian market took its cue from the weaker overnight close of the US market as well as the poor show by Asian equities; the financial sector was the worst hit, said Mr Mihir Vora, Head of Fund Management (Equities), HSBC Asset Management (India) Private Ltd.

Among the global indices, the Dow Jones closed 0.41 per cent down on Monday, creating a dampening effect across the globe. The Nasdaq fell 1.17 per cent, the Nikkei 1.96 per cent, the FTSE 2.34 per cent, and the Hang Seng 3.8 per cent.

“Global rating agency Fitch putting the Indian currency on the watch list for a potential downgrade was another major factor,” said Mr Vora.

FIIs net sellers

FIIs were net sellers to the tune of Rs 702.7 crore, while the domestic institutions were net buyers for Rs 283.4 crore, according to the data on NSE.

“The US-based funds which invest in emerging markets are facing redemption pressure due to the liquidity crunch there,” said Mr Vishwas Agarwal, an independent analyst.

Hedge funds are also pulling out money from India and investing in crude, he added.

Some of the major domestic brokerages had large FII sell orders, said Ms Anita Gandhi, Head of Institutional Business, Arihant Capital Markets Ltd. She said there was substantial selling of bluechip stocks.

All the sectoral indices ended in the red today with BSE-Bankex amongst the worst hit, falling by 7.75 per cent. BSE-Realty fell 5.44 per cent.

On the BSE, 2105 stocks declined, while only 535 stocks advanced.

The Sensex futures and Nifty futures are trading at a discount which means that there is an expectation of a further downside, said analysts.

The outlook in case of Indian markets looks weak as the markets are waiting for some signs of stability both from the US and domestically, said Mr Sandeep Shenoy, Strategist at PINC Research.

There is money on the sidelines but with more bad news expected, investors are apprehensive, said Mr Rajesh Subramaniam, Managing Director, Walden International (India), a venture capital firm.

RUPEE slumps

The rupee depreciated by 30 paise against the dollar due to Fitch ratings downgrade of the local currency and the huge losses in the stock market.

The domestic currency opened at 42.98 and closed at 43.22/23, against the previous close of 42.92/93.

Bond prices fell after international rating agency, Fitch Ratings, downgraded India’s domestic currency outlook to ‘negative’ from ‘stable’. Prices fell by around 45-50 paise following the report, said bond dealers.