Indian shares slid on Tuesday, along with most global peers, on concerns that China may further tighten monetary policy to curb inflation and that Ireland is in talks with the European Union and IMF for a bailout. A rate hike in South Korea also dampened sentiment in the Asian region.
The sell-off resulted in the Sensex and Nifty closing well below their psychological levels of 20,000 and 6,000, respectively. The Bombay Stock Exchange (BSE) Sensex shed 2.19 per cent, or 444.55 points, to close at 19,865.14. Earlier, the index opened at 20,371.73 and touched a high of 20,380.10 in early morning trades. The National Stock Exchange (NSE) Nifty lost 2.20 per cent, or 132.90 points, to end at 5,988.70.
“The situation in Ireland has raised concerns that many other countries in Europe may find it difficult to meet their debt commitments,” said Anagram Capital CEO Mayank Shah. The cost of insuring against debt default in other European countries like Portugal and Greece has also increased.
According to a Bank of America (BofA) Merrill Lynch November survey of fund managers, more than a third of global investors have identified EU sovereign funding as their key risk. “It’s possible that the year-end rally has already happened, leaving investors vulnerable to event risks, such as a deepening European sovereign debt crisis or a dollar rally,” said Michael Hartnett, chief global equity strategist at BofA Merrill Lynch Global Research.
On Tuesday, all the Sensex stocks except Bharti Airtel ended in the red. Sterlite Industries (down 5.40 per cent to Rs 172.60), Hindalco (down 5.21 per cent to Rs 212.05) and Jaiprakash Associates (down 4.57 per cent to Rs 122.20) were the major losers.
The market breadth was deeply negative, with more than four stocks declining for every one that advanced on the BSE. The BSE Midcap and the BSE Smallcap indices fell 2.15 per cent and 2.92 per cent, respectively. All the sectoral indices on Asia’s oldest bourse
Realty and metal indices suffered the most, with a fall of more than 3 per cent each. According to provisional figures on the NSE website, foreign institutional investors net sold Indian shares worth Rs 196.69 crore on the cash market, while domestic institutions were buyers to the tune of Rs 449.59 crore.
Among other Asian markets, the Shanghai Composite lost 3.98 per cent, Tokyo’s Nikkei declined 0.31 per cent, Hong Kong’s Hang Seng slipped 1.39 per cent and Seoul’s Kospi dropped 0.77 per cent. At the time of going to press, major European markets were trading 1.3-2.0% lower. Wall Street also opened lower, with the Dow, S&P 500 and Nasdaq around 1.3% off on morning trades.
