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Sensex crashes to 52-week low amidst rumours

The Bombay Stock Exchange Sensex nose-dived to a 52-week low, touching 3,193 points as the rumour mill worked overtime.

Rumours had it that the country will face a severe economic crisis following the G-8 decision to stop loans to India. That the fundamentals of the Indian economy are not strong as Finance Minister Yashwant Sinha decided to roll back the price of urea to the pre-Budget level besides slashing the special import duty last week. And that nearly 20 of Harshad Mehta's brokers will default in payments. As a result, his favourite stocks started loosing gravity.

Complicating matters further was talk that the Chinese ringit and the Japanese yen would be devalued against the dollar.

At the end of the day, the BSE Sensex lost 194.45 points against the previous week's close of 3347.41. Same was the case with the NSE Nifty index which closed at 916.80 points, thus losing 54.35 points against the previous close of 971.15 points.

Ajit Ambani, managing director, Share Deal Financial Consultants Private Limited, told Rediff On The NeT, "The selling pressure was from the foreign institutional investors after rumours spread that the Asian currencies were losing their value against the dollar and that sanctions will cripple the Indian economy."

However, Nitin Anantkar, head of research, Jardine Fleming, said, "The market was upset that the finance minister reversed his own Budget decisions. The reversals came too soon."

Scrips in which the Big bbull traded also crashed and there were no takers for them today.

To quote a few, Sterlite Industries was quoting at Rs 184 compared to Rs 204.40 last week, BPL was selling at Rs 275 as against Rs 306.25, Videocon International at Rs 100.40 as against Rs 111.50.

"The investors realise that the stocks in which Harshad dealt were at an artificial level,'' said Ambani. ''The correction is taking place now."

However, Hari Unandikar, assistant vice-president, Bank of India Finance, said, ''When the market sentiment is low, the brokers turn bearish, no matter what the scrip is.''