All major global benchmark indices recovered smartly from their 52-week lows following bailout packages and reduction in rates by central banks in the US, Europe and Asia, including India.
Major indices had hit a 52-week low on November 20. The Asian equity market witnessed a better recovery compared with that of American and European markets.
The Hang Seng rose by 38.19 per cent to 14,753.22 on December 9 from its 52-week low of 10,676.29. China’s Shanghai Composite surged by 22.39 per cent to 2,037.74, while the National Stock Exchange’s (NSE) Nifty went up by 23.58 per cent to 2,784 from its low of 2,252.75 and the BSE Sensitive Index recovered by 19 per cent to 9,162.62 from its 52-week low of 7,697.39 on October 27.
All European indices — the UK’s FTSE 100, Germany’s DAX and France’s CAC 40 — surged above 15 per cent from their 52-week low. The Standard & Poor’s 500 surged by 22.76 per cent to 909.70, whereas the Dow Jones Industrial Average touched a one-month high on December 8, improving by almost 20 per cent to 8,934.18 after touching a low of 7,449.38 on November 20.
The global stock market value increased to $29.81 trillion on December 8 from its low of $27.75 trillion on November 20, gaining almost $2.06 trillion in market capitalisation. However, the global market wealth saw an erosion of $28.73 trillion from its 52-week high of $56.48 trillion.
Asian stocks gained the most, witnessing value appreciation of $1.25 trillion compared with the rise in US and European markets in terms of market capitalisation. Among the Asian markets, the Chinese market was the best performer, registering a $402-billion increase in its market capitalisation from $1.61 trillion to $2.02 trillion, followed by Hong Kong ($370 billion) and Japan ($300 billion).
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As the financial turmoil continues to thrash world economies, triggering a collapse of a number of financial institutions, bailout packages from different governments across the world touched the $3-trillion mark, about three times the size of the Indian economy.
Global central banks are reducing rates as economies weaken around the world. The US Federal Reserve, European Central Bank, Bank of England and Reserve Bank of India reduced their benchmark rates in an unprecedented corresponding effort to ease the economic effects of the worst financial crisis.
The Indian government has announced a comprehensive Rs 30,700-crore fiscal stimulus package — including Rs 20,000-crore non-plan expenditure, 4 per cent excise duty cut amounting to Rs 8,700 crore and benefits worth Rs 2,000 crore for exporters — to fight the economic slowdown.
Earlier, the US government had moved the historic $700-billion rescue plan, which crosses over $990 billion, in response to the deepening credit crisis that has seen the fall of Wall Street icons like Lehman Brothers and Washington Mutual and the distress sale of Merrill Lynch. The UK administration also announced a $876-billion bailout package, primarily to shore up the fortunes of the nation’s banking sector.