Market tumbles as global financial crisis spreads

A sell-off in index pivotals pulled down Sensex close to 800 points at provisionally lost 679.26 points. Stock markets across Asia and Europe plunged. US futures were down indicating of lower opening of US markets. The Sensex hits its lowest level in more than two years and the S&P CNX Nifty hit 1-½ year low.

Consumer durables and realty stocks plummeted. Reliance Infrastrucutre and Sterlite Industries fell more than 14%. Jaiprakash Associates fell more than 13.5%. Tata Steel fell more than 10%. Reliance Industries (RIL) fell more than 6.5% while Infosys fell more than 5%. The market breadth was weak as selling was witnessed across the board.

US futures were trading lower. Nasdaq futures were down 30 points and Dow futures were down 194 points.

The global financial crisis spread further to Europe and doubts persisted about the effectiveness of the US administration's $700 billion US financial sector bailout plan. Despite weeks of huge liquidity injection by central banks, money markets remained tight, reflecting deep-rooted reluctance by banks to lend to each other.

The uncertainty over the nuclear deal with the United States persisted as Condoleezza Rice, US secretary of state, left New Delhi at the weekend without signing the US-India nuclear deal. The domestic bourses also ignored reports that the market regulator Securities & Exchange Board of India (Sebi) may relax norms of participatory notes. The market also ignored fall in inflation and further fall in oil & commodity prices.

As per the provisional figures, BSE 30-share Sensex lost 679.26 points or 5.42% to 11,847.06. The index shed 793.75 points at the day's low of 11,732.97, hit in late trade, its lowest level since 13 September 2006. The Sensex fell 241.83 points at day’s high of 12,284.49, in early trade.

The S&P CNX Nifty was down 195.05 points or 5.11% to 3,623.25 as per the provisional figures. Nifty hit a low of 3,581.60, its lowest level since 16 March 2007.

BSE clocked a turnover Rs 3921 crore today, 6 October 2008 as compared to a turnover of Rs 4801.25 crore on Friday, 3 October 2008.

The BSE Mid-Cap index was down 7.02% at 4,349.19 and the BSE Small-Cap index was down 6.78% at 5,094.67.

The market breadth was weak on BSE with 271 shares advancing as compared to 2,375 that declined. 29 shares remained unchanged.

India’s largest private sector company by market capitalization and oil refiner Reliance Industries fell 6.64% to Rs 1,644.05. The stock hit a 52-week low of Rs 1,632.10 today. The promoters of Reliance Industries converted their 12 crore warrants into an equal number of shares. Post-transaction, the promoter group holds 49% stake in the company, with 52% voting rights. This involves an infusion of around Rs 15,142 crore into the company. The shares have a lock-in period of three years.

Reliance Industries is also reportedly mulling the merger of its different formats -- Reliance Hypermart, Reliance Super and Reliance Fresh -- to make its retail arm more efficient.

India’s second largest IT exporter by sales Infosys declined 5.03% to Rs 1,321. It recovered from the session’s low of Rs 1,275.15.

Reliance Infrastructure (down 14.6% to Rs 633), Sterlite Industries (down 14.09% to Rs 340), Jaiprakash Associates (down 13.87% to Rs 100), Tata Power Company (down 10.3% to Rs 797), Grasim Industries (down 9.4% to Rs 1,593.25), Tata Steel (down 11.06% to Rs 350.25), declined sharply from the Sensex pack.

Realty stocks declined. Indiabulls Real Estate (down 9.89% to Rs 144.85), Unitech (down 9.85% to Rs 101.10) and DLF (down 10.33% to Rs 301.65) edged lower.

Consumer durables stocks plummeted. Gitanjali Gems (down 16.75% to Rs 155.85), Blue Star (down 12.3% to Rs 245.70), Titan Industries (down 11.45% to Rs 953.85) and Videocon Industries (down 9.99% to Rs 185.60) edged lower.

India’s largest electric equipment maker by sales Bharat Heavy Electricals declined 7.48% to Rs 1,449.40. Bharat Heavy Electricals and Nuclear Power Corporation of India are reportedly in talks with foreign firms Siemens, Alstom and GE for a third partner in their planned joint venture to set up nuclear power projects in India.

Asian stocks fell today, 6 October 2008, led by shares of exporters, after a hectic weekend in Europe as the financial crisis gathered steam there, knocking the euro to the lowest in a year. Fears that damage from dysfunctional financial systems in developed economies would almost certainly push them closer to recessions, weighed on Asian stocks. Key benchmark indices in Hong Kong, China, Japan, South Korea, Singapore and Taiwan were down by between 4.12% to 5.23%.

In Europe, France’s CAC 40, Germany’s DAX and UK’s FTSE 100 were down between 3.11% to 5.85%.

US light crude fell 3.8% to $90.34 a barrel as concerns grew the slowing economy would choke off energy demand.

BNP Paribas France's biggest listed bank, today, 6 October 2008, said it was paying 14.5 billion euros ($20.1 billion) to take control of European financial group Fortis. Germany gave blanket bank deposit guarantee on Sunday, 5 October 2008, to prevent panic as officials clinched deals to rescue Germany's Hypo Real Estate -- after an initial bailout failed -- and recapitalize two other European banks.

In South Korea, banks were having trouble raising foreign currency funds and the government pledged to give banks access to the country's foreign exchange reserves, the world's sixth largest at nearly $240 billion.

US stocks declined in volatile trade on Friday, 3 October 2008, on concerns whether the $700 billion rescue plan, which was approved by the US Congress would be quickly implemented and whether it would be enough to shore up the economy. The Dow Jones Industrial Average slid 157.47 points or 1.5% at 10,325.38. The tech laden Nasdaq Composite index shed 29.33 points or 1.48% at 1,947.39.

The market regulator ---Securities & Exchange Board of India (Sebi)----- is expected to review restrictions on issue of participatory notes (P-Notes) at a board meeting today, 6 October 2008. Reports suggest that--- Sebi---- may ease restrictions on P-Notes. However, the Reserve ---bank--- of India has always been against allowing investments through P- Notes. P-Notes are derivative instruments issued by foreign institutional investors (FIIs) to other overseas investors seeking to invest in Indian securities, but are not registered with the stock market regulator---- Securities & Exchange Board of India (Sebi)----- either out of choice or regulatory issues.

With the end of third quarter of the calendar year 2008 on Tuesday, 30 September 2008, hedge fund are bracing for heavy redemption amid US financial sector crisis which has already spread to Europe. Investors in hedge funds are usually allowed to exit funds only on the final day of the financial quarter. Large-scale investor redemption in hedge funds may trigger further selling by foreign funds in India. Hedge funds mainly operate through the participatory notes route in India. However, there is no data available on the quantum of hedge funds’ investment in India.

The next major trigger for the market is Q2 September 2008 results. IT bellwether Infosys kickstarts the reporting season on 10 October 2008.

Last-minute administrative hitches forced Condoleezza Rice, US secretary of state, to leave New Delhi at the weekend without signing the US-India nuclear deal to end more than three decades of isolation for India's nuclear programme. The deal is now expected to be signed by US president George Bush on Wednesday, 8 October 2008. Cautious Indian negotiators have been keen for Bush to sign the deal into US law and to publish a presidential statement before signing the agreement themselves.

The agreement allows US companies to provide India with technology for its civilian nuclear programme, ending an embargo in place since India tested a nuclear weapon in 1974. It also gives India international status as an acceptable nuclear power, even though it is not a signatory to the Nuclear Non-proliferation Treaty.

Inflation based on the wholesale price index rose 11.99% in 12 months to 20 September 2008, below the previous week's annual rise of 12.14%, government data released after trading hours on Friday, 3 October 2008, showed. Inflation for the week ended 26 July 2008 was revised upwards to 12.53% from 12.01%.