By IRNA,
New Delhi : Banks have gone bust, jobs have been cut and stock markets are taking a pounding the world over. And in India, this is the worst October in the 29 years that the 30-share benchmark Sensex has seen.
In sheer percentage terms, this is the worst fall the Sensex has seen in a less than 30-day period – from 13,006 to 10,170 points, a drop of 21 per cent.
This is the worst performance recorded by the bellwether index since it was started in 1979. A similar drop was witnessed in the October of 1992 and 2000, when the Sensex fell by 10-14 per cent, reported Times of India quoting to available data.
In 1992, it was on account of the securities scam and in 2000, the collapse was triggered by the burst of the dotcom bubble. The other years when the market recorded a poor performance in the same month were 2005 (a fall of 9.3 per cent) and 1990 (9.2 per cent).
October 2008 was marked by seven 500+ point crashes. During the month, index heavyweight Reliance Industries saw a fall of 30 per cent in its stock price, while other blue-chip constituents such as ICICI Bank (which fell 21 per cent), Bharti (12 per cent) and HDFC (10 per cent) have also taken a hit. October has also seen the worst performance in terms of percentage losses for a month in the year 2008. Mind you, the month still ain’t over — five trading days remain.
Of course, foreign institutional investors (FIIs) have contributed their bit for this ‘performance’. They have remained net sellers of stocks to the tune of Rs 11,463 crore — the maximum sold by them in any October, going by SEBI data. While domestic mutual funds have tried to put up a show by staying net buyers, this hasn’t really helped the Sensex.
Even though the index is down by around 3,000 points this month, mutual funds have invested Rs 691 crore this month – their second-best effort since October 2005, when they had put up a whopping Rs 3,019 crore.
However, some have sensed an opportunity amidst this gloom and doom. Arun Mehra, manager of Fidelity India Focus Fund, says, “In fact, it is the perfect contra-play. The issue of inflation that we have seen in India has been primarily driven by rising oil and commodity prices; India imports about 70 per cent of the oil it consumes. As these prices begin to moderate, I would expect inflation to fall and the market to recover.”
Meanwhile, the benchmark Sensex tumbled by over 488 points and again dipped below the 10k level in early trade on Thursday as jittery foreign funds as well as retail investors dumped stocks due to melting global stock markets and dismal quarterly results by some corporates.
The National Stock Exchange index Nifty also tumbled by 147.05 points, or 4.13 per cent to 2,918.10.
Prime Minister Manmohan Singh’s comment on the economy on Wednesday that the short-term outlook is cloudy due to global financial turmoil also influenced market sentiment in Mumbai.
He further said steps must be taken to avoid credit crunch from turning into a crisis of confidence.
The 30-share index, which had lost 513.49 points on Wednesday, fell by a whopping 488.62 points, or nearly 4.8 per cent at 9,681.28, a level last seen in July 2006, as all the sectoral indices were trading in negative zone with losses between 2.2 to 5.85 per cent.
Marketmen said increased capital outflows by foreign funds following melting global equity markets and depreciating Indian rupee against US dollar were major factors behind the free-fall in stock prices on the domestic bourses.
“Global cues are so weak even several measures taken by the government and the RBI failed to buoy market sentiments,” said Manoj Choraria, a leading Delhi-based stockbroker.
Major losers which dragged the Sensex down were Bharti Airtel, L&T, RIL, ICICI Bank, Reliance Infra, BHEL, SBI, Infosys, Tata Consultancy, Satyam Computers, Tata Steel and Wipro.
Meanwhile, the US Dow Jones Industrial Average plunged 5.69 per cent last evening, while most of the Asian stock markets were down by almost 6 per cent in opening trade.