The sub-prime mortgage crisis continues to haunt the financial markets as markets across Asia fell sharply and the Bombay Stock Exchange (BSE) fell by 190 points or 1.1 per cent to close at 17,400 on Monday after Goldman Sachs was charged by the Securities and Exchange Commission (SEC) on Friday with defrauding investors in 2008.
The broader Nifty also fell 1.1 per cent to close at 5,203.
As far as the Indian markets are concerned, experts feel that expectation of rise in interest rates may also have played its role in the fall on Monday.
All Asian and European markets were in the red on Monday following the fall of 1.1 per cent in Dow Jones Industrial Average (DJI) in US on Friday after the news broke.
While it may be too early to reach conclusions on the new episode, experts say that the markets reaction may be in anticipation of an expected shift of US policymakers towards the banking reform and over the real quantum of the issue.
“The worry is that the banking regulation act that took a backseat, may now become a prominent matter to be taken up by US policymakers,” said a market expert on conditions of anonymity.
“While on the face of it the Goldman Sachs issue may not be big, but there are concerns on the real quantum of the issue and on other companies being involved into it,” said Divyesh Shah, CEO, Indiabulls Securities.
“I think the Indian markets will remain volatile in the short-term but will create opportunity for the long-term,” said Sanjay Sinha, CEO, L&T Mutual Fund. “With whatever is visible right now, one should not expect a large impact of the Goldman episode.”
“After the monetary policy we may see some clarity emerging for the Indian markets that are witnessing a correction that was due,” said Shah.
While Hang Seng in Hong Kong fell 2.1 per cent, Nikkei 225 in Japan fell 1.7 per cent. Taiwan index was down 3.2 per cent but it was China that saw the maximum fall of 4.8 per cent during the day.