Mumbai, Aug 5: The stock market today plunged deep into red on worries over a possible recession in the US with the benchmark Sensex crashing by over 700 points to slip below 17,000 level.
The 30-share benchmark index fell to as low as 16,990.91 points in early afternoon trade, registering a fall of 702 points or about 4 per cent.An estimated amount of Rs 2,50,000 crore was wiped off from the total investors' wealth, measured in terms of combined value of all listed stocks, in just about three-and-a-half hours of trade.
After briefly plunging below 17,000-level for the first time since May 2010, the Sensex was trading at 17,057.92 points at 1230 hrs, a fall of 635.25 points from its yesterday's close.
In the past three trading sessions also, the Sensex has lost nearly 620 points.The market had opened sharply down this morning with a fall of as much as 483 points within minutes, amid concerns over the US economy moving towards recession and mirroring the overnight tremors in the US market. Weak Asian markets also aided to the fall on Indian bourses.
However, the market recovered some of the lost ground, but a sharper bout of selling followed around the mid-day—as negative trends were seen in the European markets also. Stocks like RIL, RCOM, TCS, Infosys, Sterlite, DLF, Tata Motors, M&M were among the major losers. The US market recorded its worst fall since early 2009 yesterday amid fears that the world's largest economy was heading towards another possible recession. Analysts said that investors are concerned over possible impact on Indian companies due to the continuing uncertainty in the US and the overnight fall in the Wall Street, which witnessed its worst fall in about two-and-a-half years yesterday.
They said that there are concerns that exports could be affected, while the companies would have to borrow at high interest rates here, as foreign borrowings could be difficult. Brokers said sentiments on the domestic bourses turned further bearish after Asian stock markets plummeted by nearly 5 per cent following overnight losses on the US market. In addition, rising food inflation and fears of hike in interest rates were dampening factor, they said.
However, some analysts saw today's fall as a buying opportunity and dismissed any panic-like situation. “The uncertainty in the US and European markets will bring in more money in emerging markets like India as the valuations are cheap here. (It's) not a panic situation, and rather it is a buying opportunity,” CNI Research's CMD Kishor Ostwal said.
“Indian market opened up following the global trend. Yesterday, US market fell by over 500 points and European market plummeted nearly 4 per cent, other Asian markets also fell,” Ostwal said.
“But this will create a value buying opportunity for the investors who were waiting for the fall,” he added. Heavy losses were seen in stocks with significant exposure to exports, as also in interest rate-sensitive sectors.
Blue-chips like Reliance Industries, TCS, Tata Steel and Infosys plunged deep into red, while stocks like Tata Steel,Hindalco and Reliance Infra also lost ground. PTI