The Hindu Business Line : Global impact leaves market gasping

THOUGH "expecting corrections" was a standard caveat that brokers and analysts threw around at the end of every discussion of the current bull run, when the correction did happen, it left many stunned.

Marketmen are usually never short of words and reasons to attribute to any movement the indices take, but Wednesday was a different story altogether.

The bourses had cooled off a little on Tuesday and international indicators were not good with most of the world markets having closed in the red. So though the day was not expected to be one that would breach new highs, the 311-point intra-day loss also was never in consideration.

Brokers and analysts struggled with the multiplicity of reasons that led to today's fall in the bourses.

Mr N. Sethuram, Chief Investment Officer, SBI Mutual Fund, however, summed it appropriately when he said, "Our market is going to be governed by international events rather than domestic ones."

The first news that came in the morning was of heavy selling by hedge funds and foreign institutional investors. The rumours came thick and fast. Though Standard & Poor had only expressed concern about the country's fiscal deficit, the market was abuzz with reports that Standard & Poor had downgraded India.

In fact, another piece of news that made a round of the bourses before it was quickly put down was that the Prime Minister, Dr Manmohan Singh, had resigned.

By 1:00 p.m., brokers had come to grips with the situation and though the recovery was slow and arduous, there was some inkling of light at the end of the tunnel.

Wednesday was one day brokers could not pinpoint reasons to explain the market. Most analysis got lost midway with a shake of the head and a comment that it should not have been so bad. Even the best of the "I-told-you-so" brigade was unusually quiet today.

In retrospect, the market is coming to grips with the reality that not all triggers are in its control. "This is the moment of realisation of the global village phenomenon. Even a butterfly flapping its wings over a South American stock market could end up affecting our own mid-cap index," said the head of investments of a broking house.

Large broking houses are seeing this as the sign that technical and economic analysis of the Indian market now has to have a global macro-economic perspective as well. If we expect foreign institutional investors to study our economic, investment and consumer behaviour, we must also begin to understand theirs, said an analyst.

Dalal Street, as per all indications, has now truly gone global.

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