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Asian flu sinks Indian market

Speculators take a cue from a plunge in Thailand?s stock exchange to bring down shares, reports Arun Kumar.

india Updated: Dec 23, 2006 16:10 IST
Arun Kumar

An Asian flu hit India’s stock markets on Tuesday. Bearish speculators took a cue from a plunge in Thailand’s stock exchange - triggered by foreign exchange restrictions imposed by the Bank of Thailand - to hammer down shares, which in any case, are weak in December. The BSE Sensex plunged 349 points and the NSE Nifty lost over 90 points.

Market pundits expect a recovery in early January, but caution about continuing volatility in the year-end period.

Since fresh inflow of funds into the market has almost dried up in December - when the stock market ebbs in line with Western vacations - speculators are playing havoc. At the slightest provocation, the Indian market goes up and down.

In Bangkok, the index closed at 14.8 per cent lower than on the previous day. All regional bourses across Asia reacted sharply, and Mumbai was no exception. The Sensex closed at 13,382 and Nifty at 3,832 after showing high volatility.

"This seems to be a knee-jerk reaction," said Nimesh Kampani, chairman and managing director of JM Morgan Stanley. Nilesh Parekh, head of institutional sales at the brokerage ASK Raymond James, said, “When the Sensex is trading above the 13,000 level, it is natural that fluctuations will be wide,” he said.

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First Published: Dec 23, 2006 14:39 IST