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Blast rips through the market heart Swinging sensex sheds 120 points

Mumbai, Aug. 25: Markets were sifting through the wreckage of the 1993 blast replay today to salvage the stock resurgence, confidence and business brio that helped the economy scramble up the slope in recent months.

Dalal Street had just begun gathering forces for another heady session — it opened at 4149.82 points and vaulted to 4170.58 at 10.20 am — when reports of the explosions past 1 pm knocked the bottom out of a rally that kept the trading floor chock-a-block since last week.

The sensex plunged 236 points from the day’s high to its low — 3943.66 — five minutes before 2 pm. Considering all the devastation happened in the space of an hour, investors heaved a sigh of relief when foreign investors swooped down to help the sensex close above 4000, at 4004.63. They are believed to have injected Rs 218.6 crore.

The 30-share index was still down 120.49 points, or 2.92 per cent, at close — the steepest fall in terms of points this year. Ten years back, on March 12, 1993, the sensex stood at 2361.15 points until trading was halted. It gained the next day.

National Stock Exchange’s nifty index finished 3.42 per cent lower at 1,266.25 points today.

For many operators, life will never be the same again, but most were determined not to let this turn into a quagmire. “Many people we know come from Kalbadevi, the epicentre of today’s blasts. We are concerned. But my sense is that the markets will be resilient. Blasts keep happening, in our country and our city. But the impact of the ones that happen close to us gets magnified,” BSE brokers Ramesh Damani said.

“We Indians are a resilient lot. We will hopefully overcome the fear by tomorrow and will be back in business,” said a fund manager with a leading mutual fund.

Sanjay Sinha of UTI Mutual Fund, who manages the company’s petro fund and other schemes, was circumspect. “We will closely monitor the markets. What we will do is rotate our funds through sectors,” he said.

Political convulsions also cast a long shadow. The Uttar Pradesh government was on the verge of a collapse, and there were new sparks in the Ayodha tinderbox. “On Tuesday, if any one goes short, it will be at his own peril,” said a trader, betraying the taut nerves.

Bullion blues

Bullion traders in Kalbadevi, Mumbai’s precious metal hub, halted trading, and the end-of-the-day quotes dried up in the aftermath of the blast. Things got worse when phones were jammed for security reasons by the authorities, and rumour-mongers took over.

Until the trading houses were shuttered, pure gold and standard gold were going steady at Friday’s closing level of Rs 5530 and Rs 5500 per 10 grams respectively; ready silver was quoting at Rs 8180 per kg.

Rupee tests 46

Jitters in the inter-bank foreign exchange (forex) market sent the rupee tumbling below the 46-dollar mark before concerted intervention by the Reserve Bank and other state-run banks helped it to recover to 45.92.

Despite dollar-buying intervention by the RBI and other public sector banks, the rupee still finished around eight paise lower compared with Friday’s close of 45.83.

Opening weaker at 45.86, the currency dipped to 45.88 in early hours, pulled down by month-end dollar demand. It was swept below 46 by reports of the blast a little after 1 pm. “The rupee lost over 10 paise within an hour. But, determined intervention by the apex bank helped stabilise trade and saved the day,” a dealer said.

Analysts, however, agree that today’s loss was a knee-jerk reaction and that the currency is likely to recover against the greenback. Though the possibility of FII investments in equities slowing down is a concern among a few, others opine that as the country's economy is in good shape, FII inflows will not be affected.

The RBI maintained the reference rate for the dollar at 45.86, and for the euro at 49.88, up from 50.01 on Friday.

At the bond markets, yields on government securities initially fell in reaction to the Reserve Bank of India (RBI) move last Saturday to bring down the repo rate by 50 basis points, only to rise by over 8 basis points when news of the blasts came in.

Bond spike

The yield on the benchmark 10-year paper rebounded from the lows it plumbed early in the session, driven down by the weekend cut in the repo rate. It ended at 5.29 per cent, off its intra-day high of 5.36 per cent, but up from 5.28 per cent, its low of the day.

Market watchers say there is still some steam left in prices of government securities as the undertone continues to be bullish with talk of a cut in bank rate also doing the rounds.

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