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Monday meltdown, two years on Global selling triggers sensex slide

Mumbai, May 15: In the biggest single-day slide in nearly two years since May 17, 2004, the sensex today nosedived more than 500 points during intra-day trade.

The market opened on a weak note, but the fall came in the second half of the session, when the index plunged to a low of 11770.76 as a global sell-off affected domestic bourses.

Some recovery at the end of the day saw the sensex closing at 11822.20, down 462.91 points or 3.77 per cent. On May 17, 2004, the sensex had plunged 565 points, spooked by the defeat of the BJP-led coalition government.

Today’s fall was the biggest correction since October 2005. From a lifetime closing high of 12612.38 on May 10, the sensex has now shed 790 points or 6.2 per cent in just three trading sessions. The market breadth on Bombay Stock Exchange was extremely weak with 684 stocks advancing compared with 1,899 that declined. About 41 stocks remained unchanged. The total turnover on BSE was Rs 3,182 crore.

Metal stocks were the biggest losers in today’s session and the BSE metal index tumbled 1188 points or 10.7 per cent, the biggest loser among sectoral indices. Shares of Sterlite Industries, Hindalco, Hind Zinc, Sesa Goa, Nalco, Tata Steel, Jindal Stainless, SAIL and Jindal Steel closed in the red.

“There are expectations that the interest rates in Japan may rise. As global hedge funds have large positions in the commodities markets on the basis of the borrowed funds from Japan, an expected sharp rise in interest rates have triggered selling,” said V.K. Sharma of Anagram Securities.

“The recent rally in the stock market has been fuelled by the commodity stocks. The sell-off wave has now come into the sector on the cues of global markets,” he added.

Domestic metal scrips had spurted over the past few months as metal firms raised prices, tracking soaring LME rates. From Rs 157.90 on March 22, the Hindalco share had jumped 53.5 per cent to Rs 242.50 on May 12.

Hindustan Zinc had spiraled up 182 per cent to Rs 1,030.70 on May 12 from Rs 365.15 in March.

Around the world

A global commodities sell-off extended into the US trading session on Monday, with investors concerned that economic growth may suffer from the sharp run-up in oil and metal prices.

By 10:45 EDT, the Dow Jones industrial average was up 21.77 points at 11402.76. The Standard & Poor's 500 Index was up 2.76 points at 1294.00. The Nasdaq Composite Index was down 3.01 points at 2,240.77.

European stock markets were at their worst two-day performance in years after many benchmark indices suffered their worst one-day percentage fall in two years on Friday, with the key FTSEurofirst 300 index down 1.2 per cent and trading at a two-month low. The index’s fall was its biggest intraday percentage drop since the July 7 2005 London bombings.

Japan’s Nikkei closed at its lowest level in two months, while the MSCI's index was down about 1.5 per cent.

“Markets are expected to remain weak in tomorrow’s trading session and directions will come from the metal price movements,” said Sharma.

The latest data shows that foreign institutional investors turned net buyers on Friday and purchased shares worth Rs 18.60 crore on May 12 against Thursday’s sales of Rs 1,199.10 crore.

The total for the month of May was an inflow of Rs 2,586.70 crore and total inflow for calendar year 2006 aggregates Rs 21,062.90 crore.

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