Will your woes in stocks never end? The benchmark Sensex slipped below 10,000 on Friday to hit a 28-month low, having slashed half the gains from an all-time peak it hit last January.
The free-fall happened even as domestic banking fundamentals turned strong and the mood perked up on fine technology sector results overnight on Wall Street, the epicentre of this year’s financial earthquake.
The plunge came partly on account of curbs on speculation in India but more because foreign institutional investors (FIIs) — the folks who made the boom in the first place — pulled out more money in panic amid haunting recession fears in Western economies.
The Sensex closed at 9,975, a steep 606 points down from the previous close, while the Dow Jones index moved up 4.7 per cent in New York. European markets were also firmer on Friday.
Local investors stayed cautious. Experts said regulatory measures to double trading margins on futures and options from October 21 to discourage undue speculation dampened the mood.
Small consolation came from the rest of Asia, where some markets closed in the red – but that did not include China and Japan. Also, FII-heavy index stocks lost ground but mid-cap and smaller value shares did relatively better.
“The index heavyweights came under pressure as long-term foreign investors went underweight on India and went in for heavy selling,” said Amitabh Chakraborty, president of equity, Religare Enterprises.
A word of hope came in a letter written earlier this week by software baron Azim Premji to his Wipro employees.
“The harder the economy falls, the higher it has the potential to grow when things recover,” he said.