Mumbai, June 9
Friday's sharp fall of the Dow Jones index in the wake of sudden spike in crude prices had its echoes across the world with all the major indices falling sharply.
The Sensex took a beating today to close at 15,066 points or 506 points lower. Earlier in the day, the benchmark index fell more than 700 points below 15,000 mark as FIIs unwound in large numbers.
According to market sources, domestic institutional investors stepped in to smoothen the landing today. In the broader markets, the Nifty ended 2.7 per cent lower to close at 4,500 points after falling to a low of 4,434 levels.
But their fingers won’t be enough to plug the whole on the dyke, say analysts.
Credit Suisse in an analysis released today said the Sensex could fall to 13,000 points by year-end as rising crude prices and run away inflation eat into profits of companies. Investors say, the RBI may raise lending rates and statutory ratios thereby forcing banks in turn to raise interest rates. Such a move, it is felt, could make financing for companies expensive and hit growth plans.
Such negative sentiment has already taken its toll on banking stocks which have been hammered mercilessly over the past dozen trading sessions.
Rising interest rates could also impact real estate stocks which have been hammered mercilessly. DLF, Unitech, HDIL and Parsvnath, which were the darlings of the bourses just in
January this year, are near or below their lifetime lows.
Today’s bear hammering indicates the trends of the coming days. Among the major losers today were banking, realty and capital goods.
The biggest loser today was Jaiprakash Associates which fell by more than 8 per cent. Other major losers were DLF, ONGC and Reliance Infrastructure.
Among sectoral indices, the BSE Realty index was the biggest loser falling by 7 per cent or 458 points. Unitech fell by more than 9 per cent to close at Rs 184. Other major losers in the sector were Housing Development & Infrastructure Ltd, Phoenix Mills and Ansal.
More hammering could be expected in the coming days depending on which way crude oil prices move. With analysts expecting crude to touch $150 over the July 4 Independence weekend in the USA, more pain could be inflicted in the markets.
The impact could be felt across the board with even heavyweights like Reliance taking a beating. Brokers interviewed by television channels expect RIL to fall below Rs 2,000 levels.
Globally, South Korea’s Kospi and Japan’s Nikkei fell by more than 1.2 per cent.
