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Journalism of Courage
MUMBAI, OCT 18: Indian markets joined other global markets as investors and funds unloaded stocks amidst worries over lower earnings by leading tech companies, high oil prices and slowdown in growth. Infotech, communication and entertainment (ICE) stocks received a battering, bringing the benchmark Sensex down by 71 points to below the 3600 mark on the Bombay Stock Exchange (BSE) on Wednesday.
Fears about US tech company earnings after a disappointing report from computer giant IBM swept through Asia’s share markets on Wednesday, knocking Tokyo, Taiwan and Hong Kong sharply lower. International Business Machines Corp reported disappointing third-quarter sales and a scaled back outlook in an announcement after the US markets closed.
Tokyo’s benchmark Nikkei 225 index dived 3.05 per cent to end at 14,872.48 — its lowest close since March 1999 — as investors scrambled to offload tech shares. Hong Kong’s Hang Seng index slumped 3.23 per cent to 14,392.88 by 0600 GMT. The Dow Jones dropped 1.46 percent to 10,089.71 on Tuesday, while the tech-laden Nasdaq index lost 2.32 percent to 3,213.96.
Wall Street’s problems stripped nearly five per cent off Taiwan stocks, which finished 270.13 points weaker at a 54-month low of 5,702.36. "Panic selling emerged as investors simply did not have confidence in the government’s market-boosting measures after Wall Street fell sharply," said Ting Kong Securities deputy trading manager Hsieh Chih-mao.
In India, foreign funds were reportedly pulling out of tech stocks following fears of negative impact on Indian ICE companies in the third quarter. The fresh setback by over 76 points in the Nasdaq Composite Index yesterday followed by indications of another sharp fall today had an adverse impact in India.
The benchmark Sensex opened weak at 3625.32 and gradually moved lower to the intra-day low of 3545.01 before closing at 3593.63 as against yesterday’s close of 3664.79, showing a net fall of 71.16 points. The BSE-100 index dropped by 45.14 points to 1802.37 from the previous close of 1847.51.
As a result, most of the shares hit their new 52-week lows and some of them even touched their lowest levels due to the continuous fall in the last one week. Stocks like Zee Telefilms, Satyam, Infosys, SSI, Wipro, HFCL and DSQ Software came under heavy selling by investors. “Valuations of Indian tech stocks have come down by 25-30 per cent in the last fortnight. Investors have lost heavily in such shares,” said BSE broker Pawan Dharnidharka.
Pointing to the net outstandings which were said to be around Rs 2800 crore, dealers said investors were not getting much opportunity to reduce their long positions if prevailing levels are of any indication. “Foreign funds have been offloading their stocks continuously creating panic in the market,” they added.
Infosys Technologies lost 3.42 per cent to Rs 6243 from Rs 6464 followed by Software Solutions 9.56 per cent to Rs 1961 from Rs 2168, Wipro 9.03 per cent to Rs 1919 from Rs 2109, Mastek down 10.35 per cent to Rs 1349 from Rs 1494, DSQ Software 16 per cent to Rs 306 from Rs 364, NIIT 2.42 per cent to Rs 1428 from Rs 1463, Bajaj Auto Rs 5.89 per cent to Rs 309 from Rs 328 and Aptech 5 per cent to Rs 352 from Rs 370.
Brokers have warned Wall Street may be poised for further losses on Wednesday after the IBM report. "There are no buyers in the market these days. Everyone is adopting a cautious stand and is waiting for someone else to put money on the table," said a dealer with a local Bombay brokerage.
