Wall St sneezes, Sensex coughs up 196

“The trigger for the fall in India came from the weakness in global markets. When Wall Street sneezes, other global markets start coughing. Nervous funds and local operators booked profits,” said a fund manager.

The Dow Jones industrial average of the US fell 1.2 per cent, its largest fall since June 23, and the Nasdaq Composite Index dropped 1.7 per cent, its biggest decline since April 15. The S&P 500 Index fell 1.5 per cent. Not only was that its biggest fall since April 15, it also pushed the broad market index back into negative territory for the year.

“The market gained over 500 points in the last eight days. A correction was overdue,” said BSE dealer Pawan Dharnidharka. The fall in the rupee against the dollar also worried the investors.

Asian stocks buckled on Thursday under the weight of heavy Wall Street losses and worries about rising US inflation and interest rates, while oil slumped to a two-month low after data showed falling US oil demand. Tokyo’s benchmark Nikkei average fell 2.4 per cent, its biggest drop since April 18. South Korea’s main share index ended down 2.0 per cent, the key Australian index lost 2.1 per cent, and Hong Kong’s Hang Seng Index finished down 1.7 per cent.

“US stocks have dropped this much before and Japanese stocks held firm, but what’s different this time is that Japanese shares have no stamina left after their recent rally,” said Yasuo Ueki, a market analyst at consultancy Poko Financial Office.

“There are worries about inflation in the US and whether that will mean the Fed will keep raising interest rates,” said Yoo Seung-min, an analyst at Samsung Securities in Seoul.

“After Katrina, we could also begin to see US consumer spending be affected, and that could be another concern,” he added.

US Federal Reserve officials have said it must be wary of inflation and data on the US services economy and home mortgages showed a fall in September, suggesting at least a temporary weakness in the world’s largest economy.

Indian ADRs were not spared either and they witnessed a sharp fall. ICICI Bank was the biggest loser, down 8.34 per cent, followed by Rediff (down 4.51per cent), HDFC Bank (down 4.36per cent), VSNL (down 3.88 per cent) and Dr Reddy’s (down 2.49 per cent).