Business | Markets
Indian shares drop 3.2% to hit two-month low
Indian shares fell 3.28 per cent on Friday to their lowest close in more than two months, hit by the deepening US financial sector crisis and the failure to reach a deal on a $700 billion bailout plan.
- Agencies
- Published: 23:32 September 26, 2008
Bangalore: Indian shares fell 3.28 per cent on Friday to their lowest close in more than two months, hit by the deepening US financial sector crisis and the failure to reach a deal on a $700 billion bailout plan.
Selling was across the board. Financial stocks and outsourcing firms, which get the bulk of their revenue from the United States, fell sharply after fragile investor sentiment was hit again by the failure of another US bank.
A sell-off in European markets and a drop of more than 1 per cent in US stock futures, pointing to a lower Wall Street open, intensified the Indian market's fall in late trade.
"People are not bothered about valuations even after a sharp slide in top stocks, they just want to exit the market at any price," said Neeraj Dewan, a director at Quantum Securities. "A recovery in such a scenario can't be expected in the near term."
Reliance Industries, India's most valuable firm, fell 3.2 per cent to 1,960.90 rupees on selling by foreign funds, traders said.
Not over
Leading private bank ICICI Bank dropped 5.8 per cent, taking its losses for the week to 10.6 per cent, and State Bank of India shed 4 per cent to 1,434.20 rupees, its lowest close since September 1.
The main 30-share BSE index ended down 445 points at 13,102.18, its lowest close since July 16, with all but three components falling. The benchmark fell 6.7 per cent on the week, its third fall in four weeks and its biggest weekly fall in more than six months.
The index is down 35.4 per cent in 2008, with net selling of $9.3 billion by foreigners a key factor in the plunge.
K.K. Mital, head of portfolio management services at Globe Capital, said there could be some short-term respite if US politicians approved a financial sector bailout package.
"The worst is clearly not over in the financial sector and till the time the financial sector stabilises, the equity markets will not see any sign of stability," he said.
Outsourcer Infosys Technologies fell 3.8 per cent to Rs1,447.70, its lowest close since April 11. The stock has fallen 17.2 per cent this month on concern the financial meltdown will cut spending by its customers.
Sector leader Tata Consultancy Services dropped 2 per cent to Rs676.45, down 11.7 per cent on the week as it fell to its lowest close in more than three years.
The IT sector index closed 3.4 per cent lower.
In the broader market, 2,183 losers heavily outnumbered 447 gainers on volume of 247 million shares.
The 50-share NSE index fell 3.05 per cent to 3,985.25, its lowest close since July 17.
Elsewhere in the region, Colombo's All-share index ended down 0.2 per cent at 2,209.05, a two-year closing low. The Karachi market was shut for a holiday.
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