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BW Businessworld

US Flu Rattles Global Markets

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Staying true to the age-old saying that 'when America sneezes, the world catches a cold', the stocks markets across the globe on Friday plunged deep into red after an overnight crash in the US bourses.

In India, the stock market plunged deep into red on worries over a possible recession in the US with the benchmark Sensex crashing by over 700 points at one time to slip below 17,000 level.  The BSE Sensex closed at its lowest level in nearly 14 months on Friday, falling 2.2 per cent, following fresh worries of a global economic downturn that sparked a slide in markets globally.

The 30-share index ended at its lowest closing level since June 2010 at 17,120.39 points, down 2.2 per cent -- its biggest single-day fall since early May. It had fallen to a near 14-month low of 16,990.91 at one stage. Only three of its components ended in positive territory.

The main stock index fell 4.9 percent for the week, its biggest weekly decline since the week of Oct. 26, 2010, and its second consecutive weekly loss.

World stocks sank for an eighth straight session of losses on Friday, with investors racked by worries about the slowing global economy and the dangerous spread of euro zone debt anguish into Italy and Spain.

The regulator Sebi said it was closely watching the situation which it attributed to global developments and assured the system was well-regulated.

"We are closely watching the situation and our belief is that everything is perfect and right in markets," Sebi Chairman U K Sinha told reporters.
The Indian bourses recovered some of the lost ground after assurances from the government and the regulator that fundamentals were strong and today's fall was only due to global factors.

The Sebi chief was replying to queries related to Friday's crash in stock market, where benchmark Sensex plunged by over 700 points or about 4 per cent to slip below 17,000-level for the first time since June 2010.

The 30-share benchmark index fell to as low as 16,990.91 points in early afternoon trade, registering a fall of 702 points or about 4 per cent.
An estimated amount of Rs 2,50,000 crore was wiped off from the total investors' wealth, measured in terms of combined value of all listed stocks, in just about three-and- a-half hours of trade.

After briefly plunging below 17,000-level for the first time since May 2010, the Sensex was trading at 17,057.92 points at 1230 hrs, a fall of 635.25 points from its yesterday's close.

In the past three trading sessions also, the Sensex has lost nearly 620 points.

The market had opened sharply down this morning with a fall of as much as 483 points within minutes, amid concerns over the US economy moving towards recession and mirroring the overnight tremors in the US market. Weak Asian markets also aided to the fall on Indian bourses.

However, the market recovered some of the lost ground, but a sharper bout of selling followed around the mid-day -- as negative trends were seen in the European markets also.

Stocks like RIL, RCOM, TCS, Infosys, Sterlite, DLF, Tata Motors, M&M were among the major losers.

The US market recorded its worst fall since early 2009 on Thursday amid fears that the world's largest economy was heading towards another possible recession.

"There is nothing for the people to worry. Our risk management system is working perfectly and all the settlements are taking place," said the Sebi chairman, while dismissing any suggestion about any adverse impact of the panic situation among investors.

Global Markets Collapse
Earlier, concerns have been raised that panic in world markets could lead to a possible flash-crash or collapse like situation on Indian bourses in the absence of a robust risk management system.

"These are matters about how you perceive the markets and the cues that you get from global developements. So, I will like to tell you that our markets and our regulatory system are perfectly on track," he said.

Earlier in the day, Economic Affairs Secretary R Gopalan attributed today's fall in markets to panic-like situation among investors due to negative news flow about the US economy.

The US markets crashed sharply on Thursday, triggering a sharp plunge in Asian and European markets this morning. PTI PPB BJ
Global markets go downhill on US worries

Staying true to the age-old saying that 'when America sneezes, the world catches a cold', the stocks markets across the globe today plunged deep into red after an overnight crash in the U.S bourses.

The tremors of US stock market, where the benchmark index Dow Jones Industrial Average (DJIA) fell by over 500 points yesterday, marking its biggest fall in over two and half years, were felt in all Asian and European markets this morning.

Taiwan, Japan, Hong Kong were among the worst sufferers, while Indian markets were seen recovering some of the lost ground after falling by more than 4 per cent to their lowest level in over a year.

The US markets saw fall of over 4 per cent last evening amid fears that the American economy was moving back towards recession following weak economic data on jobs and manufacturing.

Mirroring the trend, the Asian markets opened weak today with similar trends seen later in Europe.

While, the Shanghai market was down by over 2 per cent, Japan's Nikkei index fell by nearly 4 per cent and Hong Kong's Hang Seng index declined
by over 4 per cent. The Taiwan market fell by nearly 6 per cent.

The UK markets were down nearly 3 per cent, while the losses were around 2 per cent in other major European markets.

The US markets have been on a downward spiral for eight consecutive days and a similar trend has been seen in most of the European markets.

The Indian bourses have also been in the red for four trading sessions now.

The US is among the major markets for most of the global economies, including India, and therefore any problems with the American economy generally impacts other markets.

(Agencies)


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