Global recession fears drag Sensex 6% down

Global recession fears drag Sensex 6% down

Mumbai: The liquidity booster of Rs65,000 crore announced by the government and RBI failed to enthuse the stock market on Thursday as the benchmark Sensex crashed by 658 points in opening trade on increased capital outflows by foreign funds triggered by weak global cues.

The 30-share index, which had lost nearly 674.28 points in Wednesday’s trading, fell by a whopping 658.52 points, or nearly 6% at 10,150.54, a level last seen in June, 2006, due to heavy sell-off by foreign funds in the stocks of banking, metals, capital goods, oil and gas and power sectors.

The National Stock Exchange index Nifty tumbled by 194.60 points, or 5.82% to 3,143.80 with all the heavy-weight stocks trading in the negative zone.

In a bid to further ease liquidity position, Reserve Bank yesterday announced another 100 basis points cut in CRR, which would release Rs40,000 crore in the cash-starved banking system.

Besides, Finance Minister P Chidambaram on Wednesday announced to provide first installment of farm debt waiver of worth Rs25,000 crore to the RBI to be distributed among commercial banks and financial institutions.

However, series of measures taken to ease pressure on the financial sector has failed to enthuse the market, traders said.

Marketmen said apart from sharp losses in the global stock markets, depreciating Indian rupee against the US dollar too dampened the trading sentiments here. The Indian rupee fell by 52 paisa to Rs49.04 against the US dollar in opening trade on the Forex market on Thursday.

ICICI Bank, largest lender in the private sector, plunged by Rs18.20, or 4.39% at Rs396, while state-run State Bank of India lost Rs31.10, or 2.08% at Rs1,466 despite cut in CRR by the central bank.

Other stocks which also dragged the BSE barometer down are Reliance Industries fell 6%, Larsen and Toubro down 6.54%, BHEL by 5.69%, Tata Steel shed 5.65%, Reliance Infra down 9.48%, HDFC Bank 5.74 per cent, Infosys Technologies lost 4.98 %, Satyam Computers by 3.82% and Tata Consultancy by 7.48% and Wipro by 6.45%.

Meanwhile, the US Dow Jones Industrial average fell by 7.87% and London’s FTSE lsot 7.16% last evening, while Japan’s Nikkei was down by 9.55% and Hong Kong’s Hang Seng tumbled 7.68% and Shanghai Index shed 3.79% in early trade on Thursday.