Sensex down 208 points

A stock rally was scuttled midway today after concerns that US sub-prime woes may be spreading forced investors into a dramatic sell-off post-noon, shaving nearly 450 points, or 3 per cent, off the benchmark Sensex from the day's high.

The index, which opened with a bang and touched a high of 15,542, up 244 points from Wednesday, started to slip amid a sell-off by global investors after BNP Paribas said it froze $2.2 billion worth of investment funds, citing trouble in the US mortgage sector.

The Sensex closed today at 15,100.15, down 207.83 points, or 1.36 per cent, while the National Stock Exchange's S&P CNX Nifty closed at 4,403.20, down 58.9 points or 1.32 per cent.

The announcement by BNP Paribas has sent shivers to other financial markets across Europe and the US markets (at the time of going to the press), indicating a further sell-off when the domestic market opens tomorrow.

Reports that the rout in the credit markets had forced bankers to cut the price of Tata Steel's $3 billion loans would also affect market sentiment tomorrow, dealers said.

US stocks tumbled by more than 1 per cent at opening, following cues from European markets, where the UK's FTSE 100 slid 2.2 per cent and Germany's DAX decreased 2 per cent. France's CAC 40 lost 2.6 per cent.

Frederic Amoudru, chief executive and country manager (India) for BNP Paribas, told Business Standard the bank's decision (announced in Europe) would have no impact at all in India, refuting market speculations that the French bank may book profits in markets such as India to offset losses in other funds.

"Each of our funds has its own risks and rewards. Investors put their money in various funds judging risks and rewards each fund offers," he said.

Amoudru said the Indian market was hit more by the sentiment from the US sub-prime woes. He felt the problems in credit markets would have no major bearing on markets such as India.

Echoed Guy Strapp, regional head of investment management, Asia, of Prudential Asset Management: "The sub-prime mess is less of a concern in Asia, particularly India, at the moment. However, going ahead, if the availability of credit in the US dries up, it may have a significant impact on the global economy."

Hindalco, which shed 3.61 per cent to Rs 156, was the biggest loser on the 30-share Sensex, followed by State Bank of India (down 3.30 per cent to Rs 1,649.60), Reliance Energy (down 3.22 per cent to Rs 757.90), Ranbaxy Laboratories (down 2.66 per cent to Rs 371.60) and Satyam Computers (down 2.55 per cent to Rs 467.10).

Among the sectoral indices, the BSE Consumer Durables Index, which tracks stocks such as Titan and Videocon, fell the most "" down 2.47 per cent. The BSE Oil & Gas Index (down 1.96 per cent) and the BSE FMCG Index (down 1.73 per cent) were the other major losers.

Stocks dropped around the world last month on concern that the debacle in the US mortgage market would hurt economic growth, slow takeovers and reduce the value of investments.