Stock market resumes trading, recovers partially
Trading was halted for an hour with Sensex crashing 1,100 pts as investors were gripped by panic. Track Sensexindia Updated: May 22, 2006 14:18 IST
The sensitive index (Sensex) of the Bombay Stock Exchange (BSE) recovered around six per cent when trading resumed on Monday after an hour-long suspension following a crash of over 10 per cent.
"My information is mutual funds and foreign institutional investors have bought today. There is no problem of liquidity," Finance Minister P Chidambaram said in New Delhi as he tried to assuage the feelings of investors.
"My advice to retail investors is: keep buying," Chidambaram told reporters after BSE suspended trading after the 30-share Sensex fell over 1,100 points or 10 per cent to continue the previous week's bloodbath.
The National Stock Exchange also suspended trading after its key index - the 50-share Nifty - tanked 10.8 per cent. This was the first time since May 17, 2004, that trading was suspended on Indian bourses.
Chidambaram said he had spoken with the authorities at the Reserve Bank of India and was told that there was no problem of liquidity and said the fundamentals of the economy were strong to lend a positive support the market sentiments.
Key officials of the finance ministry were also in touch with the Securities and Exchange Board of India (SEBI) and keeping a watch on the developments, even as watchdog chief M Damodaran said there was no liquidity crisis.
The Sensex was ruling markedly below the crucial 10,000-point mark at 9,826.91 points at noon - 1,111.70 points or 10.16 points below Friday's close - when the authorities decided to suspend trading for an hour.
The stocks of Reliance Industries, Larsen and Toubro, Gujarat Ambuja Cement and ITC were among those that led to the steep fall.
The Sensex had closed on Friday at 10,938.61 points to register a staggering loss of 1,346.50 points or nearly 11 per cent from its previous week's close.
The key index had touched an all-time intra-day high of 12,659.79 on May 11 riding on the sustained institutional buying interest in new as well as old economy heavyweights.