It was the day of bears. Stock markets crashed like nine-pins after a series of bomb blasts rocked the business capital, pulling the benchmark BSE Sensex down by over 227 points at one stage in intra-day trading. The index finally closed 120 points down with nervous bulls beating a hasty retreat. There was a dramatic change in the market scenario which saw a flood of sell-orders from all sectors including retail investors. As a result, the market capitalisation — total market value of all listed shares — fell by a whopping Rs 28,914 crore to Rs 809,278 crore. The free fall was somewhat checked as domestic financial firms stepped in to pick up stocks at low levels, but they could not pull the market back to normalcy. “The six-session winning streak was cut short by the blasts and sudden developments on the political front in Uttar Pradesh, which wiped away any buying activity amidst all round panic selling,” said BSE broker Venkat Aiyer. Corporates beefing up security following blasts Corporate India reacted with shock and disbelief at the bomb blasts. Mumbai will bounce back and this is the time for restraint: This is the message from India Inc to the rest of the country. At the same time, corporates are making heavy security arrangements in their offices and factories. • “India, its economy and the people are strong enough to withstand such attacks. it would be business as usual tomorrow: CII president Anand Mahindra. • “There is no need for panic..With a foreign reserves of $83 billion and food grains stock of 51 million tonne, the economic condition of India is quite strong to face such challenges”: Ficci secretary general Dr Amit Mitra • “These incidents are shocking. The spirit of Mumbai is to move on as the enterprising spirit of the city will never die but these type of incidents really shake business confidence”: Asian Paints vice chairman & MD Ashwin Dani • “What happened is sad and irrational. Apart from the loss of innocent lives, these unfortunate happenings derail the economic growth momentum as well”: Great Eastern Shipping Company MD Vijay K. Sheth • “It has come out at a time when the Indian economy is doing well”: Assocham spokesperson The investor sentiment was rattled by the blasts, which came at a time when the share market had been expected to rally into a sixth straight week, buoyed by strong foreign fund inflows and expectations of strong economic growth after a good monsoon. “It is early days yet to assess the impact and we have to wait and see how this unfurls,” said Gul Teckchandani, chief investment officer at Sun F&C. “Market sentiment has been affected but, for now, I do not think this will have any impact on the broader economy,” he added. Up by over 45 points at one point, the 30-share BSE Sensitive Index (Sensex) settled with a huge loss of 120.49 points or 2.92 per cent at 4,004.65. The Sensex had dipped by 227 points to a low of 3,943.66 from the peak level of 4170.58 in intra-day trades immediately after the reports of the bomb explosions. The NSE S&P CNX Nifty Index also shed 40.05 points to end at 1,271.10. The market displayed intense volatility. It opened firm following the Repo rate cut on Saturday and chances of further fall in interest rates. However, it lost ground in the late-morning trades due to a possible political crisis after the resignation of the UP Chief Minister Mayawati. This transformed into a selling-selling avalanche after reports about the bomb blasts reached the stock market. While retail investors indulged in a selling spree, operators also unwound long positions in the derivatives segment following the imminent expiry of August 2003 series futures contracts. Most of the stocks were in the red in the selling frenzy following the blasts. Besides, there were concerns over the inflows from foreign institutional investors (FIIs), especially after FIIs pulled out Rs 393.60 crore last Thursday. However, they still remained net buyers to the extent of over Rs 1,700 crore for the current month so far. Traders said there was nervousness among market players over the attacks, the worst since 1993 when a series of bomb blasts killed at least 260 people. There is a fear that foreign funds, especially hedge funds, might pull out of Indian stocks. Equity traders were hopeful Monday’s slide would be a passing phase in a market which has rallied 37 per cent from a six-month closing low hit on April 25. “The market was overbought and this was a trigger for a selloff,” said Abhay Aima, head of equities at HDFC Bank. (With inputs from Reuters) WHAT THEY SAY • ‘‘It was a small blip, markets are stable, (our) economy’s fundamentals are strong.’’ —Jaswant Singh, Union Finance Minister • ‘‘The political implications of this (blast) is more important now. I have told all my clients to be more cautious (in investing). The initial panic may be over, but this will have far wider implications. foreign investors will now be more careful.’’ —Anand Dalal, Ashvin Chinubhai Broking Ltd • ‘‘I started selling stocks the moment I heard the blast. People (investors) are watching the situation carefully. The market may have corrected itself for now, but will not take to it lightly in the long run. No matter what, there will be security lapses and such things (blasts) will happen. No one is safe now.’’ —Harsh J Nahata, HJN Capital Services Ltd
