At 12:03 pm, the BSE Sensex fell 388 points or 4.18% to 8,902. It had earlier hit a high of 9,169 and a low of 8,892. The NSE Nifty was down 4.2% at 2,680
Indian stocks have turned weaker again, with the BSE Sensex falling below 9,000 and the NSE Nifty falling under 2,700 on continuing selling across global equity markets. Investors are shunning risky assets like equity in favour of safe havens such as government bonds amid growing concerns over corporate profits in a worsening global economic climate.
After a brief recovery that followed a steep fall in opening trades, the Indian market has again turned lower, led by Banking and IT shares. Oil & Gas, Capital Goods, Power and Metal shares too remain under pressure, as the local economy slows amid shrinking consumer and industrial demand.
Finance Minister P. Chidambaram's reassurance that the Indian economy will bounce back next year after this year's drop also failed to boost the sagging spirits of the bulls. He, however, added that the global recession will be longer and painful for all.
Sentiment continued to get hit by almost relentless sell-off in global markets. US stocks fell overnight after Citigroup announced that it will cut more than 50,000 jobs to cut costs. Asian stocks too extended their fall amid mounting worries over the global economic gloom.
HSBC said yesterday that it was laying off an additional 500 staff in Asia after announcing 1,100 job cuts in September. Separately, London's Daily Telegraph reported over the weekend that JP Morgan Chase is planning thousands of job cuts worldwide, citing people close to the matter.
Asia-Pacific stocks outside of Japan fell 1.85%, bringing year-to-date losses to around 58%, according to an MSCI index. Asia's losses have outpaced the all-country world index, which is down 47.5% in 2008.
At 12:03 pm, the BSE Sensex fell 388 points or 4.18% to 8,902. It had earlier hit a high of 9,169 and a low of 8,892. The BSE Small-Cap and Mid-Cap indices were down 2.2% and 2.3%, respectively. The Sensex is down nearly 15% in the last five sessions and has lost 54% in 2008 to be one of the worst Asian performers.
On the other hand, the NSE Nifty was down 4.2% at 2,680 after being as low as 2,675 and as high as 2,802.
Meanwhile, the rupee weakened in early trade today, as expectations of further selling by FIIs hurt sentiment. At 11:35 a.m., the partially convertible rupee was at 49.65 per dollar as against Monday's close of 49.34/36. It had touched a lifetime low of 50.29 on Oct. 27.
Foreign funds have sold a net US$13bn worth of Indian stocks in 2008 after buying a record US$17.4bn in 2007.
India's economy will bounce back next year as the Government takes steps to stimulate domestic demand, Chidambaram said today.
"There will be a slowdown in India and steps taken and those that will be taken, to a large extent, will compensate the factors causing the slowdown," he said at the India Economic Summit in New Delhi. "We are confident we'll end this year with satisfactory growth rate."
Chidambaram said that the Government would take steps to stimulate the economy and the rupee would strengthen again once capital starts flowing in. "We will take steps to stimulate the domestic economy to compensate for the downside caused by the downturn in the world economy," he said.
He added that India could miss its annual export target of US$200bn for this fiscal year as the slowdown in developed nations trims overseas demand.
JP Morgan on Monday cut its Indian growth forecast for 2008-09 to 6.7% from 7% and for 2009-10 to 6.2% from 6.8%, and saw aggressive rate cuts by the Reserve Bank of India (RBI) to support growth momentum.
Citigroup too has lowered India's economic growth rate projection to 6.8% from 7.2% for this fiscal year due to slowdown in consumption and investment.
