22
Jan
08

SENSEX: Trading on bourses suspended

MUMBAI (Reuters) – Indian shares fell as much as 12.9 percent on Tuesday before ending down 4.97 percent, a seventh successive loss, as panicked investors sold amid margin calls on declining share portfolios and fears of a global downturn.

Share markets around the world sank for a second day on Tuesday, with Tokyo’s market posting its biggest fall since the session after the Sept. 11, 2001, attacks on the United States, as fears of a U.S.-led global recession intensified.

India’s 30-share BSE index closed 875.4 points down at 16,729.94, its lowest close since Sept. 21. India’s two most valuable firms, Reliance Industries and state-run Oil and Natural Gas Corp led the market lower.
The intra-day fall of 12.9 percent was larger than Monday’s drop of almost 11 percent, but short of a 17 percent intra-day fall in May 2004 that followed an unexpected election result.
Buying interest led by state-run insurance firms helped the market recover some ground. At the close, the index was 21.1 percent below a record high hit on Jan. 10.

The 50-share NSE Nifty index closed down 5.94 percent at 4,899.30 points, having plunged as much as 14.6 percent.

“Over time as better clarity emerges and sanity returns to the market, I think the Indian stock market should bottom out and outperform,” said Chakri Lokapriya, who manages $1.3 billion worth stocks in BRIC markets for BNP Paribas in London.

“I would not say this is the bottom or not, but what I would say at the end of the year the market will close 25 percent higher from its end-December levels.”

IPO SHORT CIRCUIT
A lot of funds have been tied up by Reliance Power’s initial public offer, with the company saying it had received bids worth $190 billion for the $3 billion of shares on offer.

That has drained cash from the market and made it harder for investors to meet margin calls on their falling portfolios.

Margin trading is where investors trade shares without paying the full purchase price. Instead a margin or percentage is paid as collateral that has to be topped up if the share price falls.
Margin calls, both by brokers to investors and by exchanges to brokers, added to the pressure, with brokers saying they were unable to trade until they paid their margin calls.

A rally at the re-open was shortlived, as the market fell to 15,332.42, its lowest since Sept. 3. The market then recovered some losses again, with traders saying state-run Life Insurance Corp and General Insurance Corp were notable buyers.
STOCKS THAT MOVED:
* Reliance Industries Ltd fell 7.3 percent to 2,358.05 rupees, taking its losses over the past six sessions to 26.7 percent.
* ONGC fell 13.6 percent to 962.55 rupees, a seventh straight fall that has seen its shares lose 26.4 percent.
* ICICI Bank, the country’s most valuable bank, fell 4.1 percent to 1,124.75 rupees, a two-month closing low, hit by poor sentiment for financials and banks across the globe.

MAIN TOP 3 BY VOLUME:
* Reliance Natural Resources Ltd on 37.4 million shares.
* Reliance Petroleum on 30.9 million shares.
* Ispat Industries Ltd on 23.3 million shares.
 

Chidambaram urges calm amid stock market falls

NEW DELHI: Investors should stay calm in the face of sharp stock market falls as the fundamentals of the economy are strong, Finance Minister Palaniappan Chidambaram said on Tuesday.

Indian shares fell more than 11 percent in the first few minutes of trade on Tuesday as panic-stricken investors dumped stocks, setting off circuit breakers that automatically halted trade for an hour.

“We had anticipated the market to open on a downward trend and hit the circuit breaker. My advice to investors is to stay calm,” Chidambaram told reporters.

The 10 biggest falls in Sensex history

Here are the 10 biggest falls in the Indian stock market history:

Jan 21, 2008: The Sensex saw its highest ever loss of 1,408 points at the end of the session on Monday. The Sensex recovered to close at 17, 605.40 after it tumbled to the day’s low of 16,963.96, on high volatility as investors panicked following weak global cues amid fears of the US recession.

Jan 22, 2008: The Sensex saw its biggest intra-day fall on Tuesday when it hit a low of 15,332, down 2,273 points. However, it recovered losses and closed at a loss of 875 points at 16,730. The Nifty closed at 4,899 at a loss of 310 points. Trading was suspended for one hour at the Bombay Stock Exchange after the benchmark Sensex crashed to a low of 15, 576.30 within minutes of opening, crossing the circuit limit of 10 per cent.

May 18, 2006: The Sensex registered a fall of 826 points (6.76 per cent) to close at 11,391, following heavy selling by FIIs, retail investors and a weakness in global markets. The Nifty crashed by 496.50 points (8.70%) points to close at 5,208.80 points.

December 17, 2007: A heavy bout of selling in the late noon deals saw the index plunge to a low of 19,177 – down 856 points from the day’s open. The Sensex finally ended with a huge loss of 769 points ( 3.8%) at 19,261. The NSE Nifty ended at 5,777, down 271 points.

October 18, 2007: Profit-taking in noon trades saw the index pare gains and slip into negative zone. The intensity of selling increased towards the closing bell, and the index tumbled all the way to a low of 17,771 – down 1,428 points from the day’s high. The Sensex finally ended with a hefty loss of 717 points ( 3.8%) at 17,998. The Nifty lost 208 points to close at 5,351.

January 18, 2008: Unabated selling in the last one hour of trade saw the index tumble to a low of 18,930 – down 786 points from the day’s high. The Sensex finally ended with a hefty loss of 687 points ( 3.5%) at 19,014. The index thus shed 8.7% (1,813 points) during the week. The NSE Nifty plunged 3.5% (208 points) to 5,705.

November 21, 2007: Mirroring weakness in other Asian markets, the Sensex saw relentless selling. The index tumbled to a low of 18,515 – down 766 points from the previous close. The Sensex finally ended with a loss of 678 points at 18,603. The Nifty lost 220 points to close at 5,561.

August 16, 2007: The Sensex, after languishing over 500 points lower for most of the trading sesion, slipped again towards the close to a low of 14,345. The index finally ended with a hefty loss of 643 points at 14,358.

April 02, 2007: The Sensex opened with a huge negative gap of 260 points at 12,812 following the Reserve Bank of India [Get Quote] decision to hike the cash reserve ratio and repo rate. Unabated selling, mainly in auto and banking stocks, saw the index drift to lower levels as the day progressed. The index tumbled to a low of 12,426 before finally settling with a hefty loss of 617 points ( 4.7%) at 12,455.

August 01, 2007: The Sensex opened with a negative gap of 207 points at 15,344 amid weak trends in the global market and slipped deeper into the red. Unabated selling across-the-board saw the index tumble to a low of 14,911. The Sensex finally ended with a hefty loss of 615 points at 14,936. The NSE Nifty ended at 4,346, down 183 points. This is the third biggest loss in absolute terms for the index.

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