Today in New Delhi, India
Sep 19, 2018-Wednesday
-°C
New Delhi
  • Humidity
    -
  • Wind
    -

Sensex recovers from day's low

Powered by higher than estimated GDP growth, the stock markets staged smart comeback. How the bubble burst: In graphics

india Updated: May 31, 2006 17:21 IST

Powered by higher than estimated GDP growth, the stock markets on Wednesday staged a smart recovery after the initial crash but still ended 388 points down at 10,398.61, showing strong co-relation with world markets.

Initially, the global meltdown and sustained FII outflows caused panic among investors with no buyer in sight in the first half of session and the Bombay Stock Exchange (BSE) 30-share sensitive index (Sensex) crumpled to the intra-day low of 10,111.96, a huge fall of 674.64 points.

News of a 8.4 per cent GDP growth in 2005-06 coupled with hectic shortcovering by Foreign Institutional Investors (FIIs) helped the market recover partially.

Ultimately, the Sensex ended the day with a net loss of 388.02 points or 3.60 per cent at 10,398.61 from previous close of 10,786.63.

The National Stock Exchange (NSE) S&P CNX Nifty also nosedived by 114.25 points or 3.59 per cent to 3,071.05 from the previous close of 3,185.30.

The sharp downslide was attributed to a world-wide crash in equity as well as a massive pull out by FIIs, which have been net sellers since May 15.

As per figures released by the Securities and Exchange Board of India (SEBI), FIIs have withdrawn over Rs 7,500 crore in the last 12 trading days.

The Dow Jones Industrial Average and the Nasdaq Composite Index on Tuesday tumbled by 184.18 points and 45.63 points. The Nikkei today ended down by 392.12 points, the Hang Seng by 105.88 points, the Singapore ST by 57.67 points and the Kospi by 11.52 points.

The markets were adversely affected by reports that emerging-market equity funds lost five billion dollars from withdrawals last week as the spectre of higher interest rates caused investors to trim holdings in some of the world's biggest developing markets.

Metal stocks saw aggressive selling in the wake of a sharp overnight fall in metal prices on LME.

The small-cap and the mid-cap stocks too came under heavy pressure and dropped sharply.

The Indian economy recorded a 8.4 per cent growth in 2005-06, higher than earlier estimates of 8.1 per cent.

Finance Minister P Chidambaram, however, ruled out any impact of the fall in stock markets on the consumer demand attributing FII sales partly to a global meltdown.

Buoyed by the 8.4 per cent economic growth in 2005-06, Chidambaram said more structural, legal and administrative reforms would be needed, particularly in mining and electricity sectors, to sustain the higher growth rate.

Excepting Tata Motors, which showed minor gain, other 29 index-based counters registered sharp to moderate losses.

The BSE small-cap index fell by 269.30 points or 4.06 per cent to 6,364.29 and the BSE mid-cap index by 142.18 points or 2.74 per cent to 5,052.44.

The volume of business, however, remained low at 3,533.09 crore. RIL clocked the highest turnover of Rs 304.23 crore followed by Tata Steel (Rs 176.73 crore), ACC (Rs 110.08 crore), NTPC (Rs 101.35 crore) and Infosys Technologies (Rs 88.48 crore).

First Published: May 31, 2006 10:10 IST