India’s stock markets threw a surprising contrast to global trends on Tuesday as they plunged even as Asian and European markets recovered from shocks linked to an Egyptian political upheaval on positive data from the US overnight.
The 30-share benchmark Sensex on the Bombay Stock Exchange dipped below 18,000 before closing the day at a five-month low of 18,022, down 305 points or 1.7%.
The broader S&P Nifty at the National Stock Exchange also fell by 88 points to close at 5417.2.
However, world markets were greener. While China, Taiwan and Japan saw their markets rise between 0.3% and 0.5%, European markets were trading with a gain of around 1% in the early hours.
“There is a complete lack of faith and everyday there are new triggers as there have been issues of scams, inflation and interest rates,” said R Venkataraman, executive director at brokerage firm India Infoline. “The government needs to take some concrete steps to reinstate investor faith.”
There are others who feel that it won’t be long.
“It is a cyclical trend and is a result of the domestic concerns on inflation and the rise in the interest rates. However it won’t long last and the long-term growth factors are intact,” said Alex Mathew, head of research at Geojit BNP Paribas Financial Services.
Foreign institutional investors that came in India in record numbers in 2010 (with a net equity investment R133,264 crore) are easing off this year in search of more stable markets. The FIIs pulled out a net of R900 crore from the equity markets on Tuesday.
While many frontline stocks have fallen by more than 20% over the past one month, experts said that the investors can get into large-capital, cash-rich companies in a phased manner.
Fallout of Egyptian crisis: oil hits $100
Oil hovered above $100 at $100.5 a barrel on Tuesday as the market assessed the risk of Egypt’s social unrest spreading to neighbouring OPEC members, but stayed below Monday’s $101 on lower factory growth in China. US crude shed 10 cents to $92.09.