Global equity markets continued to bleed on Tuesday, as investors turned apprehensive of the US government’s bailout plan for ailing banks. Following global cues, domestic equity indices ended the day in the red. International crude prices eased off on Tuesday after recording the highest single-day gain on Monday as frenzied buying saw prices shoot up by $16 per barrel.
The Sensex lost 425 points, or 3 per cent, to close at 13,570 points, while the wider Nifty of the National Stock Exchange dropped by 96 points or 2.3 per cent to shut shop at 4126.90 points.
“There is no clarity on the bailout plan for banks,” said Abheek Barua, chief economist, HDFC Bank. “The challenge will be how they will eradicate toxic assets in these banks. Whether the announced package of $700 billion will be enough or not is another question.” Shares of banks were battered in most global bourses as the US policy makers haggled over the proposed rescue package for banks, indicating that no action may be taken in the current week. The BSE Bankex lost 4.2 per cent. Weakness in financial markets is expected to continue until investors get a fair picture of what the US government is going to do with sick bank assets.