The Hindu Business Line : Markets this week

News that the global financial turmoil, triggered by the ongoing US financial crisis, is now pushing the hallowed institutions in Europe and the UK against the wall sent the Sensex plunging to an 18-month low on Monday, to a sub-13,000 close. The benchmark index closed at 12,595, falling 506 points or 3.87 per cent from its previous close. Earlier, the Sensex opened flat at 13,109, closely tracking the Asian markets, and gradually drifted to an intra-day low of 12,400, a fall of nearly 700 points from Friday's close.

Banking stocks fell dramatically as investors got wary in the wake of happenings in the banking and financial sectors globally. The BSE-Bankex was the biggest loser among the sectoral indices falling by more than six per cent.

Realty stocks tumbled and many logged their 52-week low on the bourses. The BSE Realty Index closed at 3400, a 52-week low, down 5.26 per cent. It had dropped 16.79 per cent over the week from 4,095.50, and 31.78 per cent over the month. In January, the index clocked a high of 13,850.

FIIs, on a selling spree on Dalal Street now, are incurring additional losses over decline in currency markets. The weakening rupee has further depreciated value of equity investments by overseas entities in US dollar and yen terms.

The stocks of Tata Motors Ltd, whose rights issue opened on Monday, fell by 4.67 per cent on the BSE thanks to the market turbulence. While the scrip touched an intra-day high of Rs 375, it recorded a low of Rs 348.50 before closing at Rs 355.85.

Domestic equities which opened sharply lower on Tuesday following the thumbs down to the US financial bailout package, bounced back on reassurances from the Finance Minister, the RBI and SEBI Chairmen on the health of the domestic markets. Tracking the overnight US markets, which fell 8 to 9 per cent, the Sensex fell 442 points to a low of 12,153 immediately upon opening. However, it ended the day with a gain of 2 per cent.

A crisis management of sorts worked on Dalal Street, even though Wall Street was yet to find a solution to the funds crisis in the short term. Market sources aver that substantial buying was there in ICICI Bank, which was subjected to hammering in the last couple of sessions, and also in a few other bank counters. A well directed short covering exercise by local players, and NAV propping up measures by mutual funds saw postponement of major selling.

On Wednesday, WABCO-TVS Ltd on its first day of listing on the stock exchanges, opened at Rs 299.90 and closed higher at Rs 321.85 on the BSE. The Rs 5 face value share touched a high of Rs 374. WABCO-TVS came into existence through a de-merger of the brakes business of Sundaram-Clayton Ltd of the TVS group. The demerger took effect on January 1, 2007.

While the financial crisis has felled several international banking giants, closer home, interestingly it is the banking sector funds that have outperformed all other categories over the last three months. Seven of the top ten performing mutual fund schemes during the July-September quarter were banking-oriented, including banking ETFs, says data provided by Value Research.

FIIs pulled out a little over $2 billion in equities from the Indian stock markets in September, according to SEBI data. The rising risk aversion consequent upon the credit crunch and financial market tangle has forced overseas investors to pull out from emerging markets, including India, at least for now, says an analyst.

The unprecedented $700 billion bail-out package, nose-diving crude oil prices, civil nuclear deal passing muster by the US Congress - the Indian markets seemed impervious to all these positive developments, and followed the weak global cues, caused by fears over the current crisis confronting the US economy. The Sensex gave-up nearly 620 points to finish the week at 12,520; Friday's loss was a whopping 530 points, reflecting the gloomy clouds still hovering over the bourses.

Compiled by B.L. Sudarsan
Podcast by S. Vasudevan

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