India once again joined a global slide in stock markets as fears of financial sector losses abroad and slowdown in industrial growth rates at home haunted Dalal Street investors. The 30-share BSE Sensex slumped 771 points, or 4.78 per cent, at 15,357.35 even as a free fall in the dollar and soaring oil prices added to global concerns.The Sensex had fallen 899 points at one stage, indicating the intense selling pressure that sent investors scurrying for cover. The Sensex had fallen 560 points intra-day on Wednesday as weak industrial production growth figures dampened the sentiment. On Thursday, markets across the globe dropped amid concerns about the effectiveness of the US Federal Reserve’s efforts to aid strained credit markets. Underlining concerns about extreme moves in the global markets, the dollar hit another record low against the euro and fell below 100 Japanese yen for the first time in 12 years, a sign of both current US economic weakness and an unwinding of risky trades involving yen borrowing. Oil sizzled at a record high above $110 a barrel and gold breached $1,000 an ounce in New York. In the latest credit market fallout, an affiliate of US-based buyout firm Carlyle Group, Carlyle Capital Group defaulted on about $16.6 billion of debt. “It is a confluence of two factors majorly. Firstly, Indian markets reacted to global cues and the Asian market meltdown affected traders who have been seeing red for the past two months now. Secondly, the impact of IIP numbers released yesterday also had an impact. Buyers are now adopting a wait-and-watch attitude. As for the valuation of stocks, corrections have made sure that no stock remains overpriced,” said Anand Shanbagh, head of equity research of Avendus. Since the beginning of this year, the Sensex has dipped 23 per cent. However, the fall has been more acute in some counters like DLF and Reliance Energy.Amar Ambani, vice-president (research) India Infoline, said, “Just when one thought the market would be supported by the US Fed’s policy to lend treasury securities and the much anticipated 50-75bps cut, one bad event spoiled the party for Indian equities. The market continued to lose ground on poor IIP numbers and breached January lows, which is an extremely weak sign on the charts.” As per data released by the government on Wednesday, growth in index of industrial production (IIP) slipped to 5.3 per cent in January 2008 as compared with 11.6 per cent in January 2007, the lowest since October 2006, when it stood at 4.51 per cent. Inflation is already above five per cent.Real estate shares were hammered brutally. India’s largest real estate developer by market capitalisation DLF slipped 13.3 per cent. It was the top loser from Sensex pack. “So valuation is not an issue now. Traders have near-term concerns, which is preventing fresh investments from coming into the markets. Even companies planning IPOs have shelved the proposals for the time being,” said a dealer.Why markets are nervous•Global stock markets fall by 2-5% as credit sector losses continue•Cascading effect of recession fears in US•Indian industrial production growth declines; inflation above 5% •Crude oil prices sizzle around $ 110 per barrel
