Nov
18
Black October: Markets Drop to new Lows
November 18, 2008 |
The market news in India has not been positive in October, which has been the worst month for the markets since January this year. The benchmark index Sensex has lost more than 4,000 points in the month of October alone (as per data till 30 October). The markets witnessed the second largest fall of the Sensex on 24 October when the benchmark crashed over 1000 points. All important psychological levels were broken that day and on the next trading session on Monday, 27 October.
The equity benchmarks Nifty and Sensex shed 20 per cent in these two sessions, only to crawl back above 9000 in Diwali’s Mahurat Trading on Tuesday. The share market news India gave some ray of hope to India that day. Since November 2007, the BSE Sensex has lost more than 50 per cent. This whopping 50 per cent loss comes in the back of the global economic turmoil and the fears of recession gripping the world. Major economies have announced massive bailout packages but they have done little to cheer the investors’ sentiments. Indian markets, which till now were considered somewhat isolated from the subprime crisis and the market mayhem across the world, fell to unprecedented levels this month.
Stock markets in India were considered to be decoupled from the US economy till sometime back when they used to outperform the world markets. But market news in India has changed drastically now. If the sectoral indices on the BSE are considered, the realty index is the worst hit. From 1 November 2007, the realty index has lost a whopping 81 per cent. It has shed more than 46 per cent this month alone. From 9000 levels it is down to 4800 levels now. Several big players in the sector like Parsvnath Developers, Unitech, Peninsula Land, Orbit Corp, Anant Raj Industries and Phoenix Mills have shed more than 50 per cent of their share prices this month.
Metal is another sector that has got badly beaten this month. The index is down 46 per cent or 4180 points on the BSE in October. If its fall from November 1, 2007 is seen, then it is down 72 per cent at this stage. In October, heavy weight stocks in the metal space like Nalco, Tata Steel, JSW Steel and Welspun Gujarat are down more than 50 per cent. Defensive sectors like pharma and FMCG have performed comparatively better this month, though both are trading lower. While the BSE FMCG index is down 20 per cent, and the healthcare sector has lost 27 per cent. No doubt, the stocks in these sectors are often the once most recommended by analysts to tide over tough times. The midcap index on the BSE has lost 35.8 per cent this month whereas the small cap index is down 34.5 per cent. The tough market conditions have not even spared the frontline stocks. Market mover Reliance Industries has dropped nearly 37 per cent or Rs 700 in October. Largest private bank ICICI was also down 37.3 per cent. Sterlite Industries was down over 42 per cent.
At this stage, investors are advised by analysts to pick up fundamentally firm stocks with a long term perspective in mind. Momentum stocks should be avoided and day traders should keep very light positions.
Vritika is an finance advisor and provides stock market news india, Share market alert, updated information on mutual funds in India, new IPO news, latest Banking News in India.
Article Source: Black October: Markets Drop to new Lows
