Indian bourses join global crash
NSE loses 88.2 points,
DSE loses 66.68,
closed BSE escapes
Slightly over 10 years ago, the world bourses saw Black Monday when share prices crashed across the globe. India was then unaffected, cut off as it was from the global trading system.
But on Tuesday, Indian stock exchanges plummeted as share prices in Asia and in the West tumbled. On the National
Stock Exchange in Bombay and on the Delhi Stock Exchange, share prices crashed due to panic selling by institutional investors.
The NSE-50 Index (Nifty) fell sharply by 88.20 points to 1032.60
points as against the previous close of 120.80 points. Similarly
the Midcap Index came down by 77.40 points to 1181.50 against
the previous close of 1258.90 points.
NSE Managing Director said the authorities are monitoring the situation. "The fall on the NSE is not justified and
was caused by panic selling by operators. However, care
has been taken accordingly by the exchange through circuit
breakers and other measures to ensure that none of the scrips
decline over 10 per cent.''
Leading stock brokers felt that the fall in share prices would have
been much more if the Bombay Stock Exchange had been open. The BSE is closed from October 28 to November 1 on account of
the Diwali holidays. However, the BSE will open for a short while on Thursday, October
30, for 'muhurat' trading.
Tuesday is the last day for the current settlement on the NSE, and most
of the operators unloaded heavily at the prime counters, fearing a further decline in share prices.
This was the second major fall on the NSE since its inception
on November 3, 1994. The NSE-50 had fallen by 89.50 points on March 31, 1997, closing then at 968.30 points against the previous close of 1057.80 points.
On Tuesday, the total turnover on the NSE increased by Rs 6.1 billion to Rs 23 billion as against Monday's Rs 16.9 billion.
The market witnessed downtrend on the NSE right from the
opening on Tuesday, said sources, and added that none of the scrips
registered a gain. Among the top five losers, Tata Tea
scrip fell by 10 per cent to Rs 365.85 as against Rs 406.50,
Bajaj Auto drifted lower by 9.99 per cent to Rs 543.60 from
Rs 603.95, Thermax was down by 9.99 per cent to Rs 250.60 from
Rs 278.40, ICICI declined by 9.96 per cent to Rs 84.05 from
Rs 93.35, while Reliance Capital lost by 9.94 per cent to
Rs 59.35 from Rs 65.90.
Tobacco giant ITC topped the list of turnover by registering
highest turnover of Rs 8.3 billion. The scrip lost by 9.77 per cent
to Rs 526.60 from Rs 583.60. It was followed by Reliance Rs 5.2 billion which declined by 9.84 per cent to Rs 341.15 from Rs
378.40; State Bank Rs 2.1 billion and recorded a fall of 9.29 per
cent to Rs 248.55 from Rs 274.00.
Hectic activity was observed at the other counters like
Tata Tea Rs 1.4 billion, MTNL Rs 796.7 million, TELCO Rs
562.3 million, TISCO Rs 521.7 million, ACC Rs 471.5 million, Castrol
Rs 339.7 million, Hind Lever Rs 329.9 million, L&T Rs 309.2
million, BHEL Rs 301.9 million, Bajaj Auto Rs 199.8 million, Hero
Honda Rs 139 million, HDFC Rs 111.4 million, Colgate Rs 93.7
million, BSES Rs 85.6 million, Digital Eq 82.4 million, LML
Rs 82.4 million, Rel Petro Rs 76 million, Infosys Tech Rs 66
million, ICICI Rs 59.3 million, M&M Rs 55 million, Guj
Amb Cem Rs 53.4 million and Nestle Rs 52.1 million.
Leading NSE members said that the Hong Kong-based foreign
institutional investors sold heavily at the prime counters
following major fall in the Hong Kong and other world markets.
Sentiments were affected badly when the report received in Bombay
said that the markets had witnessed a further in Hong Kong and
New York, the members said.
On the Delhi Stock Exchange, share prices crashed and lost over eight per cent of the value of the
investors' portfolio in a single day's trading.
Panicky foreign institutional investors mounted selling pressure
as they saw the major stock indices crash all over the world markets such as New York, Tokyo, Sydney and
the Philippines.
The benchmark DSE Equity Index (base 1983) was down 66.68 points
closing the day of turmoil at 753.50 -- a loss of 8.17 per cent.
Most of the bluechip stocks came tumbling down and widespread losses were seen in
Reliance, State Bank of India and ACC.
ACC closed at Rs 1095 against Rs 1,205.25, Reliance at Rs 341.40
against Rs 378.25, and State Bank
of India at Rs 247.40 against Rs 275.25.
Tuesday's crash reminded investors of Black Monday about ten years
ago.
Meanhile, in Hong Kong, the overnight plunge on Wall
Street battered the Hong Kong stock market, making it suffer its worst
one-day loss since 1989, while London shares tumbled to their
steepest point losses in history.
The worldwide panic-selling was even worse than analysts had
predicted, leaving many traders just hoping they could ride out the
turbulence that began last week with a speculative assault on Hong
Kong's currency.
"We'd have to go back to 1987 to see falls of similar nature,
although not entirely comparable,'' said Neil MacKinnon, chief
economist with Citibank in London. "But there's no doubt that
investor sentiment's been badly rattled.''
Dealing screens at the London Stock Exchange, Europe's biggest
bourse, lit up in a glowing red from the opening to indicate the
market was full of sellers with few buyers.
After three hours of trading, the Financial Times-Stock Exchange
100-share index was off by 259.0 points, or 5.4 per cent, at
4,581.7. It was a huge loss, but things had been far worse earlier
in the session.
Throughout global markets, the red ink spread wildly as
investors reacted to the worst single-day point drop in the history
of the Dow Jones Industrial Average, a 554-point, 7.2-per cent fall
that prompted the New York Stock Exchange to shut down early
on Monday.
Steep overnight drops in Asia spread to Europe's markets, big
and small, from the opening.
German Economics Minister Guenther Rexrodt warned against
panic and overreaction, but Frankfurt's DAX Index was off by
almost 7.7 per cent midway through the trading session, after early
losses gave it a loss of 10 per cent.
In Paris, the CAC 40 Index was off by 7.2 per cent in the early
afternoon, partially recovering from an early plunge of nearly 10
per cent. Many Paris shares began trading late, after officials
halted dealings amid an overbalance of sell orders.
Hong Kong's hang Seng Index had shed 11.45 per cent of its value
in the first two minutes on Tuesday, then bottomed out at the midday
break, down by 15.44 percent. The Hang Seng bounced up slightly in
the afternoon to close at 9,059.89 points, down 1,438.31 points, or
13.7, per cent for the day.
The fall exceeded last Thursday's 10 per cent crash and was the
worst since 1989, when the market lost 22 per cent of its value in
reaction to the Chinese army suppression of pro-democracy protests
in Beijing's Tiananmen Square.
Hong Kong's market has now lost 33 per cent of its value in the
past seven trading days and 45.6 per cent from its peak of 16,673.27
on August 7.
In Tokyo, the benchmark 225-issue Nikkei stock average lost
725.67 points, or 4.26 per cent, to close the session at 16,312.69
its lowest level since July 1995.
No one has found any link between the market drop and Hong
Kong's July 1 reunification with China. Investors and
analysts alike said the plunge would have happened no matter what
flag was flying.
In keeping with their pledges of autonomy for Hong Kong, Chinese
finance officials have taken a hands-off stance while expressing
confidence in the territory's economy.
The market dominoes started falling in Southeast Asia over the
summer when investors dumped regional currencies and stocks,
nervous over rising debt and falling exports. The contagion spread
to Hong Kong last week, when speculators judged the Hong Kong
dollar was overvalued.
The government successfully defended the currency by pushing up
interest rates, but that harmed corporate earning prospects and
hammered the stock market.
The Hong Kong dollar was stronger early on Tuesday, trading in a
range of 7.7320 to 7.7330 to the US dollar, as investors were
drawn to the high interest returns.
Losses were heavy in smaller European markets, including Milan,
Amsterdam, Brussels and Stockholm, although most stock price
barometers seemed to bottom out in the morning before showing signs
of stability.
On Russia's main stock exchange, prices fell 3.8 per cent after
wary officials delayed the opening by several hours. Israeli stock
officials temporarily closed the Tel Aviv Stock Exchange after it
lost 8 per cent in the early going.
On smaller Asian markets:
-- The Taiwan Stock Exchange Weighted Index closed down 452.52
points, or 5.9 per cent, to 7,210.01 points, its lowest level since
January;
-- In South Korea, the Korea Composite Stock Price Index tumbled
below the 500-point level and closed at 495.28, down 35.19 points
or 6.6 per cent, for its lowest level since 1992.
-- In Singapore, the key Straits Times Industrials Index was at a
five-year low at midday of 1,492.77, down 127.13 points or 7.85
per cent.
-- In Kuala Lumpur, the benchmark Composite Index of 100 bluechip
stocks was down 46.34 points, or 6.7 per cent, to 647.05 in
mid-afternoon.
-- In Australia, the All Ordinaries Index closed down 177.8 points,
or 7.18 per cent, at 2,383.6.
-- In New Zealand, the benchmark NZSE40 capital Index crashed 307
points or 12.45 per cent, down to 2,162, at the close of Tuesday after
a three-day labour weekend holiday.
Many analysts blame the steep slide in Southeast Asia's markets
for triggering the recent tumble of bourses around the world.
But they also say markets in countries such as the United States
and Japan were ripe for the fall as investors reassessed the value
of stocks relative to corporate earnings prospects.
The immediate cause traces back to a string of currency
devaluations in Southeast Asia that began in July and soon led to a
weakening of the region's stock markets.
Uncertainty over the global impact of an across-the-board drop
in Asian markets, most recently in Hong Kong, led investors to
limit their risk by selling stock in markets around the world.
UNI
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