MUMBAI, Aug 17: Indian stock markets declined sharply and joined other falling Asian markets as the Russian currency crisis forced foreign investors to unload shares. The BSE Sensitive Index (Sensex) fell by 51.68 points to close at a new 52-week low of 2,917.07 points. The S&P CNX Nifty index of the National Stock Exchange closed at 854.55 points to register a loss of 9.55 points.The free fall in the market indices was accompanied by a simultaneous fall in the value of Reliance, which touched a new low of 119.50. Reacting to the Russian currency crisis, speculators rushed to the counters of Dr Reddy's, Nestle, ITC and Tata Tea to liquidate their holdings in anticipation of a negative impact on the earnings of these companies in the next quarter.The news that the Russian government and its central bank had announced a de facto devaluation of the rouble and debt repayment moratorium after the yen plunged, dragged Japanese share prices 2.2 per cent lower and below the crucial 15,000 point level. OtherSouth-east Asian stocks and currencies also remained weak.Marketmen said the sentiment would remain under pressure on Tuesday as the Russian currency problem was likely to cause tremors in other markets. Asian currency markets were weak on Monday as the Russian move triggered worries about China's commitment not to devalue the yuan.Although the market attributed the continuous fall in the stock prices of HPCL, BPCL, Hindalco, Gujarat Ambuja, Dr Reddy's, EIH, Indian Hotel, MTNL, Reliance, Zee Telefilm, Smithkline Beecham, Bank of Baroda, Godrej Soaps and Goodlass Nerolac to huge sales pressed by foreign institutional players, the figures provided by the exchanges shows that these were mere rumours.Interestingly, the local institutions provided enough appetite to the supplies provided by the FIIs. On the BSE, the financial institutions bought stocks worth Rs 37 crore, while on the NSE they bought stocks worth Rs 12.56 crore. According to market sources, Unit Trust of India, Life Insurance Corporationand SBI Mutual fund placed buy orders at the counters of EIH, NIIT, Tata Infotech, Andhra Valley, ABB, Tata Power and EIH."The devaluation of Russian currency may affect other world currencies and which could have a worst impact on the Indian market too. Many companies which are exporting to Russia will be affected," said a broker.According to analysts, it is too early to estimate the impact on the Indian companies at this stage. "Commodities like tea, coffee and tobacco are exported to Russia. Thus major exporters like Nestle India, Hindustan Lever and ITC could be affected. Multinationals would generally operate in a single currency, say the dollar," said an analyst, adding that the immediate impact on companies like Nestle India, Hindustan Lever Limited and ITC, which are the heavy weights, would be a bear hammering on these stocks.In the case of Hindustan Lever, around 25 per cent of its exports turnover comes from Central Europe. The company is an export house with total exports at Rs 1,152crore in 1997. Overall exports of soaps, detergents and personal products form 5-7 per cent of the total exports, i.e. around Rs 70 crore.However, industry observers feel, that more than India it will be China which will have to bear the brunt as the Russian trade with China is higher as compared to that with India.
