Indian stock index falls to lowest since late 2005

by Sanjay Jha | October 24, 2008 at 02:31 am

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Indian stocks crashed to its lowest level in nearly three years. The fresh bout of selling pressure came after India's central bank cut down the growth projections. Also central bank refused to intervene in the sliding currency and didn't do any further interest rate cut.

After infusing Rs 1,85,000 crore liquidity into the banking system this month, RBI on Friday surprised the market by keeping its key rates unchanged in the mid-term review of annual monetary policy, which lowered economic growth projections to 7.5-8% for 2008-09.

Soon after the RBI announced its credit policy, markets witnessed one of the worst trading sessions following meltdown in global markets on concerns of slowing global economy and recession.

Markets were under pressure not only from traders but market was abuzz with reports that some long only funds had turned sellers. Statements of assurance from finance minister P Chidambaram did little to change bearish sentiments.

Chidambaram said the RBI's policy decision to keep rates steady was on expected lines. He said the RBI would infuse liquidity and if required, would adopt conventional and unconventional tools.

Chidambaram said, RBI will continue to manage financial price stability along with sustainable growth. He asked investors to remain calm and not resort to panic selling in the market.

At 2:16 pm, Bombay Stock Exchange’s Sensex was at 8759.48, down 1012.22 points or 10.36 per cent. The index touched a low of 8757.17.

National Stock Exchange’s Nifty was at 2624.40, down 10.83 per cent or 318.75 points. The broader index touched a low of 2611.15.

BSE Midcap Index was down 8.04 per cent and BSE Smallcap Index fell 6.83 per cent.

Hindalco Industries (-18.96%), Ranbaxy Laboratories (-18.24%), ONGC (-16.11%), Sterlite Industries (15%) and DLF (14.6%) were the worst hit.

None of the stocks in the 30-share could stay afloat.

Market breadth worsened with 2272 declines against 255 advances on BSE.

Asian markets closed sharply lower. Nikkei 225 closed 9.60 per cent lower, Hang Seng fell 8.30 per cent and Kospi was down 10.57 per cent. Things were no better in European markets. FTSE 100 was down 5.72 per cent, CAC 40 fell 7.15 per cent and DAX slumped 6.93 per cent.