After rising 204 points from Friday’s close of 10,939, the index suddenly dropped to end 1,111 points lower, triggering a market closure.
Mumbai: You don’t need to go to Disney World to experience a roller-coaster ride. The vagaries of the Indian equity markets seem to be providing just as many thrills, with the Bombay Stock Exchange’s Sensex having one of its most volatile sessions on Monday.
After rising 204 points higher from Friday’s close of 10,939, the index suddenly dropped to end 1,111 points lower, triggering a market closure for one hour from 11.56 am.
On resumption, with the finance minister and market regulator making soothing noises, the market recovered ground to close at 10,482.
But with investors losing paper wealth of Rs5,90,000 crore in eight trading sessions, the bulls appear cowed, and bears are beginning to call the shots.
Nobody, though, is willing to call it a bear market — yet.
“It appears to be a case of money leaving equity and commodities quickly on a worldwide scale. The decline has not been due to bear hammering or any other conspiracy theories. In fact, the extremely high volatility makes it difficult for traders to short-sell, and I would be very surprised if significant short positions have been built up during this crash,” says analyst Deepak Mohoni.
Looking back at events of the past eight trading days, it’s clear that the US Federal Reserve Board’s decision to hike interest rates earlier this month has triggered a massive global reallocation of reserves away from riskier emerging markets and commodities and towards safer US treasury bonds.
FIIs have pulled out Rs5,910 crore from Indian equity since May 10, but since they were buyers before that date, their net sales stand at Rs2,204 crore.
On Monday, emerging-market shares fell for the 10th consecutive day, the longest losing run in almost 8 years.
While the Sensex suffered the second-largest fall among other world markets, Indonesia’s Jakarta Composite fell 6.03%. Hong Kong’s Hang Seng, Singapore’s Straits Times, South Korea’s Seoul Composite and Malaysia’s KLSE Composite fell 3.11%, 3.10%, 2.46% and 2% respectively.
Pakistan’s Karachi 100 and the Philippines’ PSE Composite indices were the only Asian markets to have witnessed minor gains of 0.63% and 0.08% respectively.
In contrast, bond markets rallied everywhere in the west. According to Bloomberg News, investors’ tolerance for risk is the lowest since the US-led invasion of Iraq in 2003. Yields on the benchmark 10-year US Treasury fell to 5.01 %in New York, after dipping below 5%.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}