Markets turn edgy on eve of bank strike
The credit market turmoil was exacerbated by news of financial fraud uncovered by French bank Societe Generale, report Lalatendu Mishra & MC Vaijayanthi.business Updated: Jan 24, 2008 23:21 IST
With the stock markets already reeling under fears of a US recession, the credit market turmoil was exacerbated by news of financial fraud uncovered by French bank Societe Generale.
However, Indian markets had to grapple with certain technical issues relating to pay-in settlements by brokers. Market players said the trading terminals of some brokers were shut as cheques paid by them had not been realized, sending stock prices down post noon.
Friday’s bank strike has caused further panic in the market. The National Stock Exchange and the Bombay Stock Exchange in a preventive move announced a clearing and settlement holiday for Friday. However trading will continue as usual on Friday.
“The European stock markets have not reacted to the SocGen news negatively so I don’t buy the argument that the fraud has affected Indian markets. It is purely a domestic issue,” said Arun Kejriwal, director of Kejriwal Research.
The BSE’s benchmark index Sensex plunged by 372.33 points, or 2.12 per cent, to close at 17,221.74. The National Stock Exchange index Nifty fell 170 points, or 3.27 per cent, to 5,033.45.
Even as the investor and broking community are coming to terms with what happened earlier this week, employees of public sector banks are going on strike on Friday, which will halt clearance of cheques. This, according to brokers, could lead to a possible payment crisis,if stock exchanges do not relax the settlement schedule. Payments for Wednesday’s transactions were due for clearance on Friday and now this can only happen on Monday in addition to clearance of Friday’s transactions because banks would remain close on Saturday (January 26).