Global markets in turmoil, Sensex crashes 463 pts

‘‘It’s part of the global correction, basically led by metals. Over the last two-three days, most Asian markets had also corrected, so it’s part of an overall correction across the globe. Besides, asset prices across sectors—be it in commodities or equities— have all risen considerably so there was a correction looming,’’ said Shashi Krishnan, CEO, Chola Mutual Fund.

In fact, the fall was so compete that no major market—barring China’s Shanghai Composite Index that gained 3.8 per cent—ended in positive territory. When contacted, the Finance Ministry refused to react to today’s development.

The third-biggest fall in the Sensex wiped out over Rs 126,000 crore of market capitalisation—total market value of all listed shares—to Rs 32.40 lakh crore. Emerging markets which were in the forefront the recent rally reeled under a huge sell-off. South Korea fell 2.2%, Indonesia 6.3% and Russia 5%.

In a roller-coaster ride, the Sensex crumpled to the day’s low of 11,770 before ending the day at 11,822 from Friday’s close of 12,285, a fall of 462.91 points. The fall in metal prices and fears of government action in cement, plus fears of higher oil prices leading to a rise in inflation—all these factors compounded the fall.

The government ultimatum to cement companies against hiking prices also impacted sentiment. Cement firms fell following comments from Commerce Minister Kamal Nath on Friday that they would face levies or export curbs if they did not curtail high prices.

‘‘The immediate trigger was the weak opening of most of the Asian markets on Monday. A weakness was visible for the last few trading sessions and it was more pronounced on Monday,’’ Motilal Oswal Securities, head (equities & derivatives) Manish Shah said.

Added Angel Broking’s Chief Investment Officer Rajan Shah: ‘‘The market had to undergo this correction as the run-up to these levels had been so sharp. I think the 11,000 level would be a good enough benchmark for people to enter the market once again’’.

Price falls in both stocks and commodities took place in a jittery atmosphere, where talk swirled of some investors having suffered financial losses in recent weeks, caused by heightened volatility. ‘‘From the point of view of the long-term investor, there’s no reason to worry too much. Volatility is part of the equity market,’’ broker Shashi Krishnan said.

ACC fell 3.9% to Rs 861.85 and Grasim Industries Ltd fell 5.6% to Rs 2,125.95. Metal producers fell on weak global prices, with Hindalco Industries losing more than 13% to Rs 210.15 and Tata Steel falling 9% to Rs 585.70. Heavyweight Reliance Industries, which has a weighting of nearly 11 per cent on the index, fell 4.3% to Rs 1,021.15 on profit-taking after a rally the previous week.

The Sensex has lost 6.4% in the last three sessions—after the poll outcome on May 11—but is still up 26% this year on the back of net foreign fund investment of nearly $4.6 billion.