Global markets lurch from black Friday to manic Monday

While infotech leaders like Infosys, Satyam and Wipro remained frozen at the lower end of the circuit, even the so-called `old economy’ stocks were hit with leaders like Reliance and Hindustan Lever diving by nearly 8 per cent in the opening session. As many as 34 stocks from the `A’ group of the BSE hit the lower circuit while a total of 548 stocks hit the lower circuit.

With Monday’s 8 per cent fall, market-favourite Infosys has fallen a whopping 20 per cent over the last one week, and Satyam 11 per cent. The overall index for infotech stocks, the S&P CNX IT, has fallen 15 per cent over the last week.

The US-induced stock market panic didn’t hit just the Sensex, but spread across the world, from Tokyo to London. The Nikkei average in Tokyo fell 8 per cent initially, and set the stage for a steep tumble in Europe. Hong Kong’s benchmark Hang Seng stock index dropped below the 15,000 level for the first time since January 25, and fell 8.2 per cent within two minutes of trade opening. London’s high-technology techMARK index was showing losses of 8.2 per cent mid-morning, and its German counterpart the NEMAX 50 slumped by 7.57 per cent in early trading. The wider FTSE 100 index was showing a loss of 3.9 per cent late morning, Frankfurt’s DAX index was trading 3.55 per cent lower, and in Paris the CAC-40 index slumped by 4.83 per cent in early trading before recovering some lost ground to show a fall of 3.33 per cent. (Most European markets recovered later, in keeping with the Dow/Nasdaq recovery on opening on Monday.)

After the initial panic, however, several markets including that in Mumbai, recovered. In Mumbai, for instance, the markets gained later, as brokers obviously realised that only of the 30-share Sensex, only two — Infosys and Satyam — are listed on the Nasdaq. At end of trading on Monday, ironically, `old economy’ stocks like cement company ACC, auto major Telco and steel giant TISCO rallied quite well. Analysts said that this was largely due to big purchases by financial institutions. At close on Monday, the top losers were HDFC Bank, Infosys, Global Telesystems, Pentamedia, Sun Pharma, ITC, Brittannia.

Foreign investors are expected to step in and go for bargain hunting at lower levels. FIIs had bought stocks worth over Rs 2,000 crore in the first two weeks of April despite the weakness in Nasdaq. Analysts said the Indian market which had risen to record levels above 6,150 barely two months ago on the steam of new economy stocks, looked set for more tumbles and bargain hunting was likely to happen only at lower levels. “There is a sense of panic in the markets, we are going through a major correction,” said an analyst with brokerage firm Prabhudas Lilladher.