Mumbai/New Delhi, Jan 22 (IANS) India’s battered stock markets made a sharp recovery Monday after Finance Minister P. Chidambaram reassured investors about the strength of the economy. But most bourses across the world remained deeply in the red on fears of US recession.
The recovery in India, however, came after a bloody morning when a benchmark index fell by 2,029.05 points, down 11.53 percent, minutes after trading began. The Sensex opened at 16,884.09 points and hit a low of 15,576.30, prompting an automatic halt in trading at the Bombay Stock Exchange (BSE).
An automatic halt is triggered if shares fall by more than 10 percent during a trading session.
It was then that Chidambaram intervened to say: “The fundamentals in the domestic economy are quite strong. Today’s market fall reflects the continuing uncertainties in the global economy and not any change in the fundamentals of the Indian economy.”
“The crash does not affect long-term sentiment and enough liquidity will be provided. We should not be bothered by the West’s economy,” Chidramabaram told reporters in New Delhi after trading was suspended in Mumbai.
The 30-share sensitive index (Sensex) of the BSE fell a little more but then rebounded and closed at 16,729.94 points, down 4.97 points, after having touched a bottom of 15,332.42.
It lost 875.41 points during the day’s trading, led by Reliance Industries and state-owned Oil and Natural Gas Corp.
The broader 630.45-share S&P CNX Nifty index of the National Stock Exchange also shed 630.45 points, down 12.10 percent at 4,578.35 points, in the morning, compared to the previous close of 5,208.80 points, and trading was halted for an hour.
Nifty also staged a recovery of sorts, closing at 4,899.30 points, down 5.94 percent over the previous day’s close, after touching 4,448.50 points. Leading the fall were realty major Unitech as well as Reliance Petroleum.
Markets across the globe largely mirrored the early morning mayhem in Indian markets. Stock markets in the Asia-Pacific and Europe also plummeted on fears of possible US economic recession.
In Japan, the benchmark 225-issue Nikkei Stock Average plunged 752.89 points, or 5.65 percent, from Monday to end at 12,573.05. It was the lowest closing since Sep 8, 2005.
South Korea saw the steepest fall since Aug 16, 2007 as the benchmark Korea Composite Stock Price Index fell 74.54 points, or 4.43 percent, to 1,609.02. Hong Kong’s Hang Seng index lost 2,061.23 points, the largest single-day drop, to close at 21,757.63.
After Black Monday when European stock markets chalked up the biggest one-day losses since Sep 11, Europe’s blue-chip Stoxx 50 index was down 1.5 percent by mid-morning after plummeting about 3.0 percent as Tuesday’s trading commenced.
Several national European stock markets posted even bigger drops.
But unlike in the rest of the world, India’s markets climbed out of the pit, helped in no small measure by the finance minister’s appeal to investors to stay calm.
Earlier, chaos enveloped the BSE, with retail investors and shareholders crowding the Dalal Street and hurling abuses. Furious investors and shareholders demanded the removal of the “bull” statue outside the BSE building.
The Sensex had lost over 2,000 points in intra-day trade Monday, as bears tightened their grip on the bourses, before staging a 700-point rally towards the closing bell.
Ascribing the steep fall to a “correction”, Prime Minister Manmohan Singh said Monday that the value of shares in India would continue to grow, as fundamentals of the economy remained strong.
“I am confident the markets will grow in an orderly fashion,” he said.