Blood-Baht claims Sensex as well

Market may bounce back after 349 point fall.

The Bombay Stock Exchange's (BSE's) benchmark Sensex snapped a four-day rally after Thailand's move to impose currency controls on international investors fueled concerns that they may slow investment in developing countries.

However, the market is expected to bounce back tomorrow after the Thailand government reversed the decision in a late night communique.

The index fell 349 points, or 2.54 per cent, today, wiping out Rs 72,036.3 crore in market capitalisation.

The Thai stock market's SET Index plunged 15 per cent, the biggest slide in 16 years, triggering declines across Asia's emerging markets, after its central bank said earlier in the day that overseas investors would have to pay a 10 per cent penalty to withdraw funds in less than a year.

The new regulations require investors to lock up 30 per cent of foreign exchange deposits for a year to deter speculation.

Comments by billionaire investor George Soros in New Delhi that India did not need to make the rupee fully convertible because capital controls would help avert financial crises also added to the selling pressure on Dalal Street.

However, analysts pointed out that the Indian market was on weak ground already after the recent run-up made stock valuations costly.

"The Thailand news was just a trigger. The market was in an over-bought zone. We are bearish on the markets till the 12,500 level. We will take a fresh look when that happens," said Ajit Roongta, fund manager, IDBI Capital Markets.

The Sensex fell by 500 points intra-day before some short-covering helped it to recover partially. Twenty-nine of the 30 stocks in the Sensex declined. The broader S&P CNX Nifty Index also shed 2.46 per cent, or 96.75 points, to 3,832.

Analysts also attributed today's fall to early rollovers in the derivatives segment by foreign funds, ahead of the Christmas vacation.

"Rollovers are happening. There were rollovers in Nifty contracts yesterday. But, I do not think there will be a deep cut due to rollovers," said Zeal Mehta, derivative analyst with Emkay Stock & Services.

All the indices ended in the red, with the BSE Consumer Goods Index, which fell by 3.28 per cent, and the BSE IT Index, down 3.02 per cent, being the biggest losers.

The BSE Mid-Cap and Small-Cap indices fell by 1.21 per cent and 1.07 per cent, respectively. "The stock market boom is sustainable over the long term. We should overlook short-term corrections. The Thailand impact is just a matter of sentiment and nothing else," Rakesh Jhunjhunwala, well-known stock trader and investor, said.

Among the Sensex stocks, Infosys fell Rs 67.75 to Rs 2,155 and Reliance Industries dropped by Rs 36.10 to Rs 1,253.05. National Thermal Power Corporation, which shed 4.58 per cent to Rs 134.25, was the biggest loser.

The other major losers were BHEL (down 4.38 per cent to Rs 2,286.55), Larsen & Toubro (down 3.8 per cent to Rs 1,415.75), Reliance Communications (down 3.58 per cent to Rs 451.15) and Satyam Computer Services Ltd (down 3.39 per cent to Rs 463.60).

Hero Honda (up 0.33 per cent to Rs 752.80) was the only scrip that ended in the positive territory.