Black FRIDAY, Worst fall; Sensex loses 1070 pts; Below 9K

Market suffers worst fall; Sensex loses 1070 points

Investors will remember October 24, 2008 as the blackest Friday the Indian stock market has seen and would want to put it behind them soon as possible.

In one of the worst trading sessions, investors helplessly saw their investments being wiped out. Those who were praying for a pull-back were left in the lurch as determined bears tore the market apart. The gains of the four-year bull-run were lost in just eight months. The biggest damage being suffered in last one month, with the indices losing over 36 per cent For traders, it was a nightmare as red blips flashed on their terminals.

The bear onslaught saw their stop-losses getting triggered. The party on the Dalal Street is over, but few would have expected such a savage end where share prices of blue-eyed large cap companies were reduced to that of smallcaps. Reliance Industries and ONGC were down 16.44 per cent and 15.01 per cent respectively. Indian equities were the worst performers.

Bombay Stock Exchange’s Sensex plunged 11 per cent or 1070.63 points to close at 8,701.07. The index touched a low of 8566.82. National Stock Exchange’s Nifty ended at 2584, down 12.20 per cent or 359.15 points. The broader index touched a low of 2525.05.

DLF (-23.96%), Ranbaxy Laboratories (-17.83%), Hindalco Industries (-17.82%), Tata Motors (-16.54%), Reliance Industries (-16.44%) and Mahindra & Mahindra (-16.04%) were the worst hit. BSE Midcap closed 8.38 per cent lower and BSE Smallcap Index ended 7.66 per cent down. The BSE Realty Index slumped 24.39 per cent and BSE Oil & Gas Index lost 14.97 per cent. Market breadth on BSE collapsed with 1835 declines against 247 advances. “Markets have fallen too much and moving up will take some time.

It can’t be said as of now whether the correction is over. Though we are in an oversold zone, news from the US markets and liquidity flows will govern the market,” said Dipen Shah, vice-president, private client group of Kotak Securities. However, this doesn’t seem to be the end of catastrophic fall on the Indian bourses. US stock futures hit lower circuit Friday an hour and half before the market opens. The Dow Jones Industrial Average futures slipped 550 points, or 6.27 percent and Standard & Poor's 500 futures shed 60 points or 6.56 per cent. Earlier in the day, Japan’s Nikkei 225 ended -9.60 per cent lower, Kospi fell 10.57 per cent and Hang Seng declined 8.30 per cent.

European markets also witnessed sharp correction. FTSE 100 was down 8.96 per cent, CAC 40 was down 8.90 per cent and DAX plunged 9.58 per cent. Shah’s advice to investors is to not panic and sell out everything. “There are still fundamentally sound stocks available at attractive levels. Good quality stocks in largecaps should not be sold and must be accumulated with medium to long term view.” Markets opened with a sharp cut but caved in after the Reserve Bank of India announced its half-yearly economic policy review, wherein it left policy rates and reserve ratios unchanged. The central bank also revised lower GDP growth target to 7.5-8.0 per cent from 8.0 per cent earlier but maintained the inflation target at 7 per cent for FY09. The revision in GDP growth forecasts led to panic among investors, already shaken by the relentless sell-off by foreign funds. There were market reports that long only funds and domestic institutions were too on sell-side.

Deven Choksey, MD, K R Choksey, said, “The arbitrage funds became really active today. They were involved in some reverse arbitrage selling in cash
and buying in the derivatives markets. Secondly, shorting by the FIIs is still rampant and even SEBI's involvement had been in vain. A lot of damage has happened to the markets and it is too late even for the regulators to take some action. Also, RBI lowered the economic growth targets adding fuel to the fire.” In today’s trade, foreign funds provisionally sold equities worth Rs 1,431 crore while domestic institution bought equities worth Rs 514 crore. Finance Minister P Chidambaram tried to intervene and calm frayed nerves but that helped little and markets plunged even further. On the RBI’s policy review meet, Chidambaram said the decision to keep rates steady was on expected lines. He added that the central bank would infuse liquidity and if required, would adopt conventional and unconventional tools.

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Carnage on Dalal Street
Sensex nosedives below 9K
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Sensex tanks 1071 pts; Nifty plunges 359 pts
Mayhem on Dalal St... Sensex bleeds nearly 1,100pts
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Markets rout hits investors hard; Sensex down 1,070 points
Post Session Commentary - Oct 24 2008
Market mauled in global rout in equities, disappoi...


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