It?s Monday meltdown again | india | Hindustan Times
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It?s Monday meltdown again

TAKING THE cue from weak global markets combined with the changing political scenario after the assembly elections, the domestic markets plunged on Monday, seeing a long-overdue correction.

india Updated: May 16, 2006 14:42 IST
ARUN Kumar

TAKING THE cue from weak global markets combined with the changing political scenario after the assembly elections, the domestic markets plunged on Monday, seeing a long-overdue correction.

The Sensex fell by 462.91 points to settle at 11,822.20 points. It saw its biggest intra-day fall since the May 17, 2004 Black Monday crash (the index had fallen by 565 points). The biggest-ever fall on the Sensex (570 points) had taken place on April 28, 1992 -- also a Monday.

The index adjusted to a downward correction by 790 points in three consecutive trading sessions. The National Stock Exchange's S&P CNX Nifty also nose-dived, by 147.10 points or 4.03 per cent, to close at 3,502.95 from last weekend's close of 3,650.05.

After last Friday's major fall in the US market, Asian markets witnessed a sharp fall on Monday. The Hang Seng was down 432 points, the Nikkei in Tokyo and FTSE 100 in London by 115 points each and South Korea's Kospi by 2.2 per cent.

The downward spiral was also attributed to a crash in metal prices globally and the government's warning to cement companies to control rising prices. Fund managers also believe that with the Left parties strengthening their position after the recent states elections, the reform process will slow down.

"The perception of reforms slowing down has naturally affected the market sentiment," said Hemendra Kothari, chairman and MD, DSP Merrill Lynch. The change in the pace of reforms is a reason for concern for everyone, he said.

Uday Kotak executive vice-chairman and MD, Kotak Mahindra Bank, said: "The Indian market has truly linked with all the global markets, whether it is stocks, metal or interest rate. Any change anywhere has an impact on the Indian market." He, however, said these short-term corrections were a healthy sign. V.V.L.N. Shastry of Firstcall India said the market had been waiting for a correction.