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Markets hit 6-week low as global worries intensify

Markets hit 6-week low as global worries intensify
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First Published: Wed, Aug 03 2011. 11 09 AM IST
Updated: Wed, Aug 03 2011. 11 09 AM IST
Mumbai: Markets fell to their lowest in nearly six weeks on Wednesday after renewed concerns about the global economy and US debt problems unnerved investors and sent world markets sliding.
The United States stepped back from the brink of default on Tuesday but congressional approval of a last-ditch deficit-cutting plan failed to dispel fears of a credit downgrade and future tax and spending feuds.
The main 30-share BSE index fell 1.2% early before paring losses to 0.8% at 17,972.77 points by 10:33am. Twenty-eight of its components fell.
“When world markets go into a tizzy, people do not want to take a risk. Although, the United States has avoided a default and also its triple-A rating has been confirmed by two rating agencies, the issue is not resolved,” Arun Kejriwal, director of research firm KRIS said.
Software services companies such as Infosys and Tata Consultancy Services that get a big chunk of their revenue from the United States were among the losers.
The US economy stumbled badly in the first half of 2011, coming close to contraction in the first quarter. It expanded just 0.4% in the first quarter, a sharp downward revision from the previously reported 1.9% gain, and rose 1.3% in the second quarter.
Leading lenders State Bank of India , ICICI Bank and HDFC Bank fell between 0.6 and 1.5% on worries over sticky inflation and rising interest rates in Asia’s third-largest economy.
“When money from the largest economy stops flowing, the one sector that gets hit is financials,” Kejriwal said.
DLF Ltd fell as much as 5.5% to Rs 215.20 after the leading listed real estate developer on Tuesday posted a 12% fall in quarterly net profit, hit by higher operational and land costs, and as it received a tax notice of Rs 550 crore in the quarter from the authorities.
The 50-share NSE index fell 0.92% to 5,406.25 points. In the broader NSE market, 1,047 losers led 281 gainers on total volume of about 156.3 million shares.
Top Indian mobile carrier Bharti Airtel fell as much as 2.5% ahead of its quarterly earnings. The company is expected to report a 10% fall in profit to 15.18 billion rupees, according to a Reuters poll of brokerages.
Auto stocks including Maruti Suzuki , Tata Motors and Mahindra and Mahindra fell between 0.3 and 2.8% on worries over slowing demand as interest rates, vehicle costs and fuel prices continue to rise in the world’s second fastest growing auto market.
Elsewhere, the MSCI’s measure of Asian markets other than Japan was down 2.24% and Japan’s Nikkei fell nearly 2%.
On Tuesday, the S&P 500 , Wall Street’s benchmark index, lost 2.6% while global stocks, as measured by MSCI’s world equity index , slipped into negative territory for the year to date.
STOCKS
Wockhardt fell as much as 2.3% to Rs 448.20, after French foods company Danone said it agreed to buy the Indian firm’s nutrition business for about 250 million euros ($355 million) and enter the baby nutrition and medical nutrition markets in India.
Monnet Ispat & Energy slipped 1.3% to Rs 488.95, after its managing director told Reuters that the steel and power producer is conducting due diligence on two African coal assets in a bid to secure raw materials.
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First Published: Wed, Aug 03 2011. 11 09 AM IST
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