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Sensex tumbles 468 points on Chinese market dip

Sensex tumbles 468 points on Chinese market dip
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First Published: Wed, Feb 28 2007. 10 38 AM IST
Updated: Wed, Feb 28 2007. 10 38 AM IST
Agencies
Mumbai: Indian stocks dropped on concerns overseas investors will sell shares after a global sell-off sparked by the biggest plunge in Chinese shares in a decade. Infosys Technologies Ltd, the stock with the largest weighting in the nation’s benchmark Sensitive Index, declined.
“India is among the most expensive markets after China,” said Jayesh Shroff, who helps manage about $3.6 billion (Rs15,953 crore) in stocks at SBI Funds Management Ltd. in Mumbai. “We will see a sell-off in line with the other markets.”
The Bombay Stock Exchange’s Sensitive Index, or Sensex, plunged 467.58, or 3.5%, to 13,011.25 as of 10:03 a.m. The index is poised to post its first monthly drop in nine months. The S&P/CNX Nifty Index on the National Stock Exchange dropped 149.50, or 3.8% to 3,744.40.
India’s Sensitive Index trades at 24.8 times earnings while China’s Shanghai and Shenzhen 300 Index is valued at 38 times earnings. Morgan Stanley Capital International’s Emerging Market index trades at 15.2 times earnings.
In the US, the Dow Jones Industrial Average dropped as much as 546 points, the most since the first trading day after the 11 September 2001, terrorist attacks. Chinese stocks yesterday fell the most since 1997 after the government took measures to crack down on excess speculation that had driven shares to records.
Infosys Technologies, the country’s second-biggest software exporter, dropped Rs70.95, or 3.2%, to Rs2,116.9.
Budget Woes?
“Markets will be jittery ahead of the budget announcement too, on concerns of the steps the government will take to tackle inflation,” said SBI Funds Management’s Shroff.
Finance Minister Palaniappan Chidambaram will present the budget for the year starting 1 April in New Delhi today.
The government will seek to contain inflation, Prime Singh Minister Manmohan Singh told reporters in New Delhi yesterday. The government’s challenge is to curb inflation while stimulating growth, Singh said.
The Reserve Bank increased its overnight lending rate for the fifth time in a year on 31 January to a four-year high of 7.5% to help slow inflation to within its estimated range of 5% to 5.5% in the fiscal year ending 31 March.
India’s benchmark inflation rate held near a two-year high at 6.63% for the week ended 10 February.
Overseas investors sold a net Rs5.82 billion worth of stocks on 26 February, according to the latest information on the Securities & Exchange Board of India’s Web site.
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First Published: Wed, Feb 28 2007. 10 38 AM IST
More Topics: Money Matters | Equities |