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Blood on Dalal Street - BSE Falls 564 Points - Trading Halted Twice During the Day

Section Election 2004 News
Posted on Sun May 16, 2004 at 11:18:22 PM EST
UPDATE 2

The markets finally ended at 4,505.16 (BSE). It is a drop of 564.71 (11.14%).

The turnaround from -800 at one point of time was largely attributed to the statement by Congress leader Manmohan Singh that the party, which is all set to form the new government at the Centre, is not against privatisation if it is in national interest and that the government would do whatever necessary to grow the markets.

END OF UPDATE 2

UPDATE 1

Trading has been temporarily suspended on the Sensex and the Nifty, as the Sensex fell by over 800 points in early deals-- its biggest-ever intra-day fall.

This is the second time the trading has been suspended today. The market regulator had first stepped in around 10.20 am, after the Sensex shed over 500 points in just 20 minutes of early deals.

Trading resumed for barely three minutes at 11:15 am before it was suspended again for another two hours, as the Sensex eroded further.

END OF UPDATE 1

Indian shares have fallen nearly 11%,(553 points) the biggest opening fall in its history, amid fears that the new government could stall economic reforms. The worst-hit were the oil and bank sectors, as these scrips registered massive selling pressures on worries of reforms.

(Click on "Full Story" for more.)

Market watchers said there was a very high level of selling by FIIs and other investors in the morning deals, which had lead to the historical fall.

The Bombay Stock Exchange (BSE) 30-share sensitive index fell 553.29 points in the first few minutes of trading, falling below the psychologically important 5,000 points mark. Trading on the Bombay Stock Exchange has now been temporarily suspended with the index at 4516.58 points.

After the Sensex and the Nifty crashed dramatically, the BSE on-line trading system stopped working and no transactions were reported after 10.20 am. Suspension of trading is an extremely rare measure, and was last seen during the time of the Harshad Mehta share scam.

It comes as leftist parties were divided over whether to join the government. Correspondents say the decision is likely to depend on what policy concessions it can extract from Congress.

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Blood on Dalal Street - BSE Falls 564 Points - Trading Halted Twice During the Day | 4 comments (4 topical, 0 hidden)
Drop due to CPM support (none / 0) (#1)
by MRZ on Mon May 17, 2004 at 12:14:38 AM EST
This is a temporary phase . Let Govt formed it will improve immediately

[ ]

FII's doing big selling (none / 0) (#4)
by Sanjay Sharma on Mon May 17, 2004 at 03:02:09 AM EST
Here is an article from The Indian Express that discusses how the FII (Foreign Institutional Investors) are pulling out money - "hot money" - from the Indian Stock Market.

FIIs sell Rs 2,066.2 cr equity in poll week

MUMBAI, MAY 16 : Foreign institutional investors (FIIS) have recorded massive net sales of Rs 2,066.2 crore ($469.4 million) in equities during the trading week ended May 14, which saw the BSE Sensex plunge by a record 600 points, wiping out over Rs 1,72,800 crore of shareholders' wealth in wake of the political developments at the Centre.

The mutual funds (MFs), however, registered net purchases of Rs 594.1 crore in the equity market, according to the data available with the Securities and Exchange Board of India (SEBI).

In the first fortnight of May, FIIs net outflows stood at Rs 2,123 crore ($482 mn) in equities and were net sellers on all trading days in the second week of the month.

In the debt market, FIIs showed net outflows of Rs 55.5 crore ($12.6 mn) while MFs were net buyers at Rs 92.73 crore during the period under review. FIIs were net sellers to the tune of Rs 604.4 crore in equities on May 14, the day bse sensex dipped by 329.6 points. They also recorded net outflows of Rs 595.2 crore and Rs 403.4 crore on May 11 and 12 respectively.

The foreign funds, in the debt market, were net sellers at Rs 5.5 crore on the first day of the trading week followed by Rs 50 crore on May 12.


[ Parent | ]


Sensex recovered by 300 points (none / 0) (#2)
by MRZ on Mon May 17, 2004 at 02:24:13 AM EST
it touch allmost 4600 level

[ Parent | ]

FII seem to be the main culprits (none / 0) (#3)
by Sanjay Sharma on Mon May 17, 2004 at 02:56:21 AM EST
It is the big money and FII that are now pulling out the money. "Hot moeny" does not like uncertainity, and flees at the slightest hint of any uncertainity.

Further, it seems that the interest rates are headed higher in some of the western countries, and so the money may be headed there.

I agree with you that this is a temporary phase, and the market will recover substantially. But to come back to the lofty levels earlier will require a lot of hard work on the part of the government.


[ Parent | ]




Blood on Dalal Street - BSE Falls 564 Points - Trading Halted Twice During the Day | 4 comments (4 topical, 0 hidden)
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