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Crash!

Aravamuthan Sasikant

The Bombay Stock Exchange Sensex dropped by 7.18 per cent (over 360 points) today -- the second-largest, single-day point drop in its history. This is the second largest percentage drop in the market, second only to the time when the Harshad Mehta scam broke out crippling the bourses.

Almost all the sectors bore the brunt of the sharp fall. Leading the plunge were the ICE (infotech, communications, and entertainment) stocks, which have been falling for the last fortnight.

Most of them have dropped by more than 35 per cent from their peak levels of February 2000. "The drop is mainly due to the negative sentiment created due to the fall in NASDAQ and a section of the FIIs being served with tax notices," says Gul Teckchandani, chief investment officer, Sun F&C Asset Management.

Additional margins and financial year-end sales further accentuated the fall in Indian markets.

"The fall today was severe mainly on three counts," says Ramesh S Damani, member, BSE. "The news of the FIIs getting income tax notices for investing via the Mauritius route, the NASDAQ recording its biggest single-day point-drop of 350 points, and today being the last day of the settlement at the NSE."

The fall has shaken the confidence of many an ardent bull operator. There have been signs of the old economy stocks picking up again in line with the trend in the global markets.

"At the current levels, the old economy stocks are looking attractive and one can see good money coming into these stocks. There are many stocks quoting at very attractive valuations and it's a matter of days before one sees buying coming into these scrips," says Ved Prakash Chaturvedi, chief executive officer, Cholamandalam Cazenove.

Just take a look at the fall in the infotech stocks. Infosys has fallen from Rs 13,813 to Rs 7,534.65 today -- a 45 per cent drop in less than a month.

Satyam Computer is down from a high of Rs 7,230 to Rs 3,748.50 -- down 48 per cent, PentaMedia Graphics has declined from a high of Rs 2,344 to Rs 978.65 and Global Tele-Systems has dropped 47.25 per cent to Rs 1,872.75 in less than a month.

TECH BLUES

Company	High Price	High Date	Current Price	% loss
Digital Equipment	1569	20/1/2000	602.65	61.59
Pentamedia Graphics	2344	23/2/2000	978.65	58.25
NIIT	3800	4/1/2000	1736.00	54.32
Wipro	9800	22/2/2000	4696.15	52.08
Silverline Industries	1395	22/2/2000	671.35	51.87
DSQ Software	2820	10/3/2000	1379.70	51.07
Satyam Computer	7230	7/3/2000	3748.50	48.15
Global Tele Systems	3550	9/3/2000	1872.75	47.25
Zee Telefims	1630	22/2/2000	865.05	46.93
Infosys Technologies	13813	8/3/2000	7534.65	45.45
Himachal Futuristic	2553	8/3/2000	1432.90	43.87

These are the examples of only the frontline stocks; the plight of smaller tech stocks is much worse with most of them having dropped by over 50 per cent from their peak levels.

Rolta has dropped from Rs 1,015 to Rs 485 levels, CMC has fallen to Rs 358.8 from Rs 873, and BFL Software has dropped from Rs 2,300 to Rs 1037.80.

However, is this the end of the bull run? Gul Teckchandani sums up the market opinion: "The current levels are looking very attractive for buying into the market rather than selling out. But one has to wait and see how things emerge in the US market in the next couple of trading sessions for the tech sector."

For manufacturing companies, there seems some hope. "The non-tech sector looks attractive selectively at the current levels with long-term perspective," says Paresh Khandwala, director, Khandwala Securities.

HINDSIGHT

Three other big market crashes have happened in the month of April:
The Harshad Mehta scam in April 1992.
The fall of the Deve Gowda government on March 31, 1997.
Vajpayee losing the vote of confidence on April 17, 1998.

Historically, most of the times when the market witnessed such a huge crash, it roared back the next day. One has to see whether history repeats itself tomorrow!

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