US credit crisis bleeds Indian markets

Mumbai: It was a sharp cut in Indian equities along with global markets through the day as endless credit crisis in the US financial space worries markets globally.

Rate sensitives, infrastructure, oil and technology stocks witnessed huge selling pressure followed by midcap and small cap stocks. Benchmark indices crashed severely on huge volumes. But some recovery was seen in last one hour of trade led by auto and banking stocks.

Bears have been playing their role for fifth consecutive day and kept bulls under control.

Financial woes are still active in the US financial space. The news of Lehman Brothers filed Chapter 11 bankruptcy has played a big role in today's session, which is one of the most reputed financial firm in the US.

This news has walloped Asian and European markets as well. US markets are likely to open lower, say experts.

Lehman Brothers says no broker-dealer subsidiaries to be included in bankruptcy filing and the company is exploring sale of its broker-dealer operations. Bank of America and Barclays had showed an interest in the Lehman Brothers but backed out.

Ramesh Damani feels that global markets will go through painful adjustment period.

Kirby Daley of New Edge Group sees outflows from emerging markets, including India. He expects a lot of action from the Fed and the US government to keep the situation under control and expects global retrenchments.

Indian benchmark indices were slaughtered severely after this news; the Sensex lost 850 points and the Nifty fell 273 points to hit an intraday low of 13,150.81 and 3955.40, respectively. The Sensex closed with a loss of 469.54 or 3.35 per cent at 13,531.27 and the Nifty fell 155.55 points or 3.68 per cent, to settle at 4072.90.

Some buying in auto and banking stocks has helped markets a bit in last one hour of trade. Both indices recovered nearly 380 points and 117.5 points, respectively.

This recovery might be because of Crude, which touched $96 to a barrel and China has cut its lending rates by 27 basis points from September 16, which also cuts its reserve requirements for small banks by one per cent.

Among the frontliners, Reliance Infrastructure went down by 9.72 per cent, Satyam -9.45 per cent, Ranbaxy Labs -7.60 per cent, Unitech -7.69 per cent, Tata Communication -7.46 per cent, DLF -7.54 per cent and Jaiprakash Associates -6.51 per cent. However, Maruti Suzuki, HDFC, BPCL and ACC were only gainers in the benchmark indices.

BSE Midcap index crashed by 248.55 points or 4.49 per cent to 5,288.59 and Small Cap Index fell 331.07 points or 4.93 per cent, to settle at 6,380.47. Among midcap stocks, Indiabulls Securities, Anant Raj Ind, Mercator Lines, Ansal Properties, Orbit Corporation, MIC Electronics, Dish TV India and IFCI lost 11-13 per cent.

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In the small cap space, Prithvi Information, Subhash Project, Take Solutions, Aptech and Everonn Systems fell 13-17 per cent.

BSE Realty Index underperformed other indices, plunged 359.20 points or 7.65 per cent to 4,334.52. Anant Raj Ind, Ansal Properties, HDIL, Peninsula Land, Akruti City, Sobha Developer, DLF and Unitech slipped 7.5-13 per cent.

IT Index fell 209.91 points or 5.51 per cent to 3,596.83. Satyam, Patni Computer, HCL Tech, TCS, Tech Mahindra, Infosys and Wipro went down by 4-9.5 per cent.

Metal stocks also lost their shine. Index closed at 10,390.84, down 490.58 points or 4.51 per cent due to Ispat Industries, Gujarat NRE Coke, Jindal Steel, JindalStainless, Hindalco, Sesa Goa, Jindal Saw, Sterlite Ind and Tata Steel fell 4.5-7.5 per cent.

Power stocks like Reliance Infra, Torrent Power, GVK Power, CESC, Reliance Power and Power Grid Corp lost 6-10 per cent. Index fell 111.46 points or 4.38 per cent to 2,435.07.

Capital Goods stocks remained under huge selling pressure. Index slipped 469.66 points or 3.97 per cent, to settle at 11,366.92. Praj Industries, Siemens, Elecon Engg, BEML, Alstom Projects and Areva T&D slipped 5-9 per cent. BHEL was down 4.04 per cent and L&T lost 3.65 per cent.

Bankex fell 237.20 points or 3.37 per cent, to close at 6,792.02. IDBI Bank, Union Bank, Karnataka Bank, IndusInd Bank and Axis Bank lost 5-7.5 per cent. ICICI Bank went down by 3.82 per cent, HDFC Bank -3.34 per cent and SBI -1.55 per cent.

Pharma stocks also felt the brunt. Index went down by 140.03 points or 3.36 per cent to 4,029.27. Matrix Lab, Glenmark, Ranbaxy Labs, Wockhardt and Aurobindo Pharma fell 4.5-9 per cent.

Oil & Gas Index lost 301.98 points or 3.31 per cent, to settle at 8,814.46. Essar Oil, RNRL, Cairn India, ONGC and Reliance Petroleum were down 5-9 per cent. Reliance Industries lost 2.45 per cent.

Auto Index was down by 71.26 points or 1.8 per cent, to close at 3,880.57. Escorts, Tata Motors, Bharat Forge, M&M, Amtek Auto, Ashok Leyland and Hero Honda were losers.

FMCG Index fell 1.38 per cent to 2,175.94. Rei Agro, United Breweries, Godrej Consumer, Britannia, Marico and HUL fell 2.5-5 per cent.

Biggest contributors to this fall were Reliance Industries, Infosys, ICICI Bank, ONGC, L&T, Satyam, Reliance Communication and HDFC Bank.

Turnover traded in markets was at Rs 77,584.67 crore. This includes Rs 11,925.03 crore from NSE Cash segment, Rs 61,185.99 crore from NSE F&O and balance Rs 4473.65 crore from BSE Cash segment.

However, another breaking news was bit of a positive for markets. Bank of America (BoA) has bought Merrill Lynch (ML) in $50 billion all stock deal. BoA will give 0.8595 shares for every 1 share of ML.

On the global markets, Asian markets closed sharply lower. Straits Times fell 3.27 per cent and Taiwan Weighted lost 4.09 per cent. Shanghai, Nikkei, Kospi and Hang Seng were shut today.

European markets were extremely under pressure due to this US financial concerns. FTSE was down 4 per cent, CAC -4.7 per cent and DAX 3.5 per cent.