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Global flu hammers Sensex down 2.9%

business Updated: Jan 27, 2010 20:28 IST
HT Correspondent

Quarterly profits are up in a large range of companies but the Sensex plunged again on Wednesday. What’s going on?

It turns out that local growth faces interest rate jitters, while overwhelming global factors are dampening the mood, causing stock markets to fall all over the world.

The Bombay Stock Exchange’s 30-share index fell 490 points, or 2.9 per cent on Wednesday, spelling a cumulative fall of 7.7 per cent over the past six trading sessions to close at 16,289. The National Stock Exchange’s 50-share Nifty fell by 3.1 per cent to close at 4,853.

Investors worldwide have turned cautious after a steady rise in the backdrop of a worldwide recovery from a financial meltdown because uncertainties are persisting in Western economies, while there are early signs of a withdrawal of growth-reviving stimulus in China.

The Reserve Bank, meanwhile, is mulling over interest rate hikes. Foreign Institutional Investors (FIIs) have also pulled out money over the past week, taking out Rs. 4,600 crore over the past six sessions.

Business leaders and policymakers are engaged in tense talks at the World Economic Forum in Davos about regulation. “There has been a healthy growth for companies on the revenue front which suggests that recovery is on track. The impact on the markets is coming from international factors particularly China’s decision to tighten monetary policy,” said Abheek Barua, chief economist, HDFC Bank.

Profit-booking is also influencing the market mood.

“Markets moved too fast to enter an expensive zone and it is now seeing some correction,” said Vikrant Gugnani, executive director, Reliance Money.