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Panic-selling, NASDAQ-plunge drag Sensex down by 5.4 per cent

There was bloodbath at the Indian bourses today as they danced to the tune of world markets. Sensex, the benchmark index of the Bombay Stock Exchange, or BSE, fell to 4881, losing 291 points, while S&P CNX Nifty, the index at National Stock Exchange, or NSE, registered a 75-point drop to close at 1443 points.

The epicentre of today's tremor in the stock markets all over the world was New York-based NASDAQ, where the NASDAQ composite index moved down by over 36 per cent in a short period of a week. The bourses suffered heavily with panicky investors indulging in large-scale selling.

''The massive 356-point fall in the NASDAQ and over 600-point fall in the Dow Jones Industrial Average were the major reasons for the crash in the markets,'' said Roshan, a equity dealer at the Motilal Oswal Securities Limited.

Tech stocks like Infosys Tech, Visual Software, Wipro, Software Solutions, Ravalgaon, Hughes Software, Aptech Limited, and HCL Techno led the slide.

Barring few old economy stocks like ACC, Siemens and Tata Tea, the markets witnessed across-the-board decline, dealers said.

''It was shocking for us to find that the NASDAQ Composite Index fell by 356 points after a continuous fall last week,'' said a leading stockbroker with BSE.

Reflecting the lacklustre trend, the Sensex lost 375 points in early trade. However, it later recorded some recovery to touch the day's high of 4899.54 points before closing at 4880.71 points, still showing a massive 291.42 points fall over the previous close.

The Nifty opened at 1518.55 points, fell below the 1500-mark by touching the low of 1412.45 points,closed at 1443.45 points, showing a net decline of 75.10 points from the previous close of 1518.65 points.

According to marketmen, everybody was turned seller in the falling market which witnessed thin business volume worth Rs 12 billion, 50 per cent less than the average daily turnover.

Marketmen reasoned the circuit filters for the thin volume as most of the key counters locked in for trading in view of hitting the lower circuits after registering maximum 8 per cent falls, they said.

Market sources attributed various reasons for the sharp fall, including warning by global strategists that tech scrips are overvalued.

The anti-trust case against Microsoft entering its final lap and the company failing to reach a settlement with the department of justice in the US, and reports of many dot-com companies in the US running out of cash, too were the reasons for the fall.

Analysts further said that the budget was the first event, which dampened sentiment on the local bourses. The local markets react so badly as they sidelined the positive factors like encouraging investment trends of FIIs in April and the low inflation rate below 4 per cent.

Analysts remain bullish over Indian IT sector

Despite the huge fall, senior industry and market experts feel that the Indian information technology industry will survive the world-wide carnage in stock prices since virtually no dot-com is listed on the Indian markets.

''At NASDAQ there is a meltdown for dot-com companies who have no revenue coming in and have run into cash shortages. But in India, the software firms have strong fundamentals. So I feel the effect of NASDAQ on Indian sentiment will be a temporary phenomenon,'' president of the National Association of Software and Service Companies, or NASSCOM, Dewang Mehta said.

Saurabh Srivastava, chairman of Infinity Fund, a venture capital fund which has already financed five start-ups, said, investors should treat Indian market totally different from the US where valuations of dot-coms had touched unsustainable levels. ''We do not have dot-coms listed in our market,'' Srivastava said.

A record plunge of 618 points in the Dow Jones Industrial Average and a 355-point drop at NASDAQ led to global crash today. Nikkei average closed 7 per cent down, while South Korean market dived by 11 per cent.

Mehta and Srivastava agreed that the dot-coms that had sprung up for the mere purpose of getting valuations and then getting bought over are in for trouble. In fact, they were happy that the correction for the Indian dot-coms is taking place at the initial stages of the euphoria.

''With this correction, investment in dot-coms will be sensible and discernible,'' Srivastava said. ''I am happy this is happening when we are just beginning to be on the dot-com economy,'' the NASSCOM president said.

Chief investment officer of Sun F&C Asset Management Company Gul Tekchandani said in an interview that with today's crash he would not think the infotech industry would finish. "The tech party is not over as yet,'' he said. He argued that the infotech and the Internet companies still offer value.

Asian bourses dance to US tunes

Asian stock markets crashed today following the biggest ever single-day point fall in Dow Jones and NASDAQ, which slid by a whopping 5.66 per cent and 9.67 per cent, respectively.

The US markets plunged on information that the country's inflation was at its fastest in the last few years.

The heavy sales lopped off almost 8.6 per cent from Tokyo's Nikkei index. The Nikkei Average was down 1,750.79 points or 8.57 per cent at 18,683.89. This also triggered off a sharp fall at the European markets. The story was along similar lines in Hong Kong, with the Hang Seng Stock Index losing 1,324 points to 14,818.66, a slide of 8.2 per cent.

Singapore's Straits Times Index lost as much as 8.31 per cent to close at 2,008 points.

The Korean markets even harder hit as they plumbed new depths crashing by an unprecedented 11 per cent, as investors ran helter-skelter trying to salvage whatever little they could in a crashing market.

Australian bourses were none too better off falling by almost 7 per cent. A fund manager in Sydney portended more bad news for infotech scrips, saying that the new economy stocks will be hammered down further.

Meanwhile, analysts in Asia predict that the markets will take at least another three months before they recover the losses they have made in the recent massacre.

They also agree with their Australian counterparts and say that the new economy scrips could fall further this week. The Philippine markets lost 4.5 per cent, while those in Malaysia saw a fall of 4.9 per cent.

UNI

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