Markets in bear grip, rupee crumbles too

FREE FALL: Realty index has under performed all other sectoral indices; and is down by over 10 per cent.

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Mumbai: Markets got heavily battered on Monday on the back of bad global cues though they have shown some recovery in late trade, as two European financial firms freed from credit crisis and US Congress is set to vote on a $700 billion bailout plan. Realty, banking, technology, power, telecom, capital goods, metal and auto stocks took huge beating on the bourses.

The Sensex closed 472.58 points down at 12,629.60 while Nifty lost 2.9 per cent to end at 3,869.65.

Heavyweights like ICICI Bank, L&T, Reliance Industries, Infosys, Bharti Airtel, Satyam, HDFC Bank, HDFC, Reliance Communication and TCS pulled the markets lower.

The Rupee, too, is at a two-year low against the Dollar.

Rupee has declined 6.2 per cent this month against the Dollar and this is the biggest monthly drop since November 1997.

Selling by Foreign Institutional Investors in equity markets for the last couple of days and expectations of further pull-out due to financial crisis also pushed the Rupee down.

European markets have seen sharp sell off; FTSE was down 3.2 per cent, CAC -2.94 per cent and DAX -2.73 per cent, at 1624 hrs IST.

European government has rescued two financial firms namely Bradford & Bingley and Fortis & Hypo Real Estate Holding. Fortis was the first firm, which caught in credit crisis in the Europe.

Euro-area economic confidence has dropped to the lowest since September 11 attacks. Wachovia is under pressure; Citigroup and Spain's Banco Santander are seen in the race to buy the company.

Earlier Spain's Banco Santander had bought branch network and deposit business of Bradford & Bingley.

US Congress will vote today on the $700 billion bailout package as compromise reached on US rescue.

Asian markets also tumbled. Hang Seng closed down by 4.29 per cent, Nikkei -1.26 per cent, Straits Times -2.08 per cent, Kospi -1.35 per cent and Jakarta -0.74 per cent.

The Taiwan Weighted was shut as Typhoon Jangmi hits the country while the Shanghai will remain shut this week for the National Day holiday.

The Sensex and the Nifty have touched new-2008 low of 12,402.84 and 3777.30 in today's session; breached earlier lows of 12,514 and 3790.2, respectively, which touched on July 16, 2008. This was the third time that they have been tried to test those levels.

The Nifty fell 135.2 points or 3.39 per cent, to settle at 3850.05 and the Sensex closed at 12,595.75, down 506.43 points or 3.87 per cent. Both indices recovered 72.75 points and 192.91 points from todays' low.

Markets breadth was pathetic; about 510 shares have advanced while 2474 shares have declined. About 195 shares remained unchanged.

Total turnover improved as compared to Friday's trade; it stood at Rs 73,600.11 crore. This includes Rs 13,109.53 crore from NSE Cash segment, Rs 55,905.70 crore from NSE F&O segment and balance Rs 4,584.88 crore from BSE Cash segment.

Earlier, markets opened lower in line with Asian markets reading bailout plan negatively. US lawmakers agreed on $700 billion draft proposal and proposed three phases of financial rescue plan.

US Congress is set to vote on the bailout package on Monday. However, total $700 billion will not be released at one go and $350 billion is dependent on Congress approval.

At 0956 hrs IST, the Sensex fell 108 points to 12,993 and the Nifty lost 26 points to 3,959. CNX Midcap went down 20 points to 4,993.

Losers in early trade were ICICI Bank, DLF, HCL Tech, Infosys, Suzlon Energy, SBI, Unitech, Maruti and Tata Motors.

HCL Tech has offered 650 pence per share for Axon. Brokerage firms have downgraded the stock after this offer. The stock fell nearly seven per cent.

JPMorgan has downgraded HCL Technologies to neutral on weak macro environment and Axon bid. Another financial firm, Morgan Stanley also downgraded HCL Tech to underweight post Axon counter-bid; it says HCL Tech bid for Axon is marginally dilutive to EPS.