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Sensex tanks again as Korean flu compounds Irish stew

Stock markets got a new scare on Tuesday as worries over Chinese inflation and an Irish economic crisis were compounded by sudden shelling of South Korea by North Korea. The result was another yo-yo day in a volatile November. HT reports.

business Updated: Nov 23, 2010 21:52 IST
HT Correspondent

Stock markets got a new scare on Tuesday as worries over Chinese inflation and an Irish economic crisis were compounded by sudden shelling of South Korea by North Korea. The result was another yo-yo day in a volatile November.

Echoing global markets, the Bombay Stock Exchange’s Sensex closed 1.33% at 19,681.84 after plummeting 618 point or 3% in intra-day trading that took it to a low of 19,342.

In the “muhurat” trading on Diwali day, the Sensex had touched a peak of 21,000 points, but has been rattled up and down since then.

“While mainly domestic worries surrounding 2G-scam are to be blamed, international worries over Ireland’s debt, Chinese inflation and today’s North-South Korea tiff were the main reasons for the nervous market,” said Alex Mathew, head of research, Geojit BNP Paribas Financial Services.

The National Stock Exchange’s 50-share Nifty closed at 5,934.75 points, down 1.25%.

The realty sector index tumbled 3.26% on the BSE.

Foreign institutional investors, the force powering the recent boom, have been directly impacted by the Irish crisis, which is heading for a rescue by the International Monetary Fund.

An industry expert, who did not want to be identified, said US-backed South Korea and China-supported North Korea.

Uncertain mood: what should investors do? Sell or hold?

As the global cues combined with domestic worries loom on the Indian capital markets, sending stocks and up and down in feverish movements, investors are a worried lot.

“Our advice to investors is that they should first reduce their exposure at higher valuations and wait until the Nifty reaches the 5800 level, which it could in 10 days. Once there, investors should go for selective buying,” said Alex Mathew, head of research, Geojit BNP Paribas Financial Services.

Although industry experts opine that that there is no need to worry as in the long run the capital market is set to go up. “During Diwali the valuations were overpriced, as of now they are priced rationally,” added Mathew.

HTC, mumbai