Sensex slides 388 points on US Federal Reserve comment


Mumbai : A benchmark index of the Indian equities markets closed Thursday’s trade nearly two percent down on reports that the US may reverse its monetary stimulus programme that spooked markets across the world.

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Finance Minister P. Chidambaram’s statement that US Federal Reserve chairman Ben Bernanke’s comments had been “misunderstood or misinterpreted” and that “he (Bernanke) has clearly indicated that he will continue with quantitative easing in the foreseeable future” failed to ease the negative sentiment.

Bernanke had suggested Wednesday that bond purchase by the US central bank may be reduced if the US economy improved further. The bond purchase had increased liquidity which is said to have contributed to capital flows into emerging markets such as India. But now investors and traders are worried that foreign institutional investors (FIIs) who have been buying heavily in the Indian market may pull out.

Trading was also affected by the steep fall in the other Asian and the European markets. Japan’s Nikkei, Hong Kong’s Hang Seng and China’s Shanghai Composite Index all crashed. The Nikkei reported a massive 7.32 percent loss, followed by Hang Seng which went 2.54 percent down, and Shanghai Composite Index that closed 1.16 percent lower.

In Europe, Britain’s FTSE 100 was trading 1.75 percent down, while the German DAX was trading 2.33 percent lower. The French CAC 40 was ruling 2.12 percent down at closing bell here.

The sectors which lost the most were capital goods, bank, oil and gas, public sector undertakings (PSU), automobile, metal, consumer durables, realty, healthcare and fast moving consumer goods (FMCG) stocks.

The 30-scrip sensitive index (S&P BSE Sensex) of the Bombay Stock Exchange (BSE), which opened in the negative at 19,971.37 points, closed at 19,674.33 points, down 387.91 points or 1.93 percent from its previous day close at 20,062.24 points.

The Sensex touched a high of 20,027.56 points and a low of 19,634.79 points in intra-day trade.

The wider 50-scrip CNX Nifty of the National Stock Exchange (NSE) also saw a downward movement and closed 2.09 percent or 127.45 points down at 5,967.05 points.

The BSE capital goods index down 517.03 points closed, bank index 423.10 points lower, oil and gas index was 233.17 points down, PSU index was down 184.06 points followed by automobile index was down 174.76 points, metal index was 164.71 points down, consumer durables index was 150.17 points lower, realty index was 122.96 points down, healthcare index was 116.73 points lower and FMCG index was 60.45 points.

The prominent Sensex gainers were HDFC, up 0.53 percent at Rs.902.95, and Sun Pharma, up 0.46 percent at Rs.1,006.55.

Among the major Sensex losers were companies like State Bank of India (SBI) that dropped 7.96 percent to Rs.2,176.20; Larsen and Toubro (L&T), down 6.49 percent to Rs.1,418.65; Jindal Steel, down 4.05 percent to Rs.291.10, Reliance Industries, down 3.99 percent to Rs.785.15; and NTPC, down 3.88 percent to Rs.148.65.