Investors suck out Rs 2,40,000 crore from Dalal Street

The US subprime mortgage meltdown has shaved off Rs 2,40,000 crore market capitalisation on the Bombay Stock Exchange in fourteen sessions. The benchmark Sensex has declined by 5.87% (900 points) from its peak of 15795 on July 24, 2007. Currently the Sensex is trading at 14500 levels. Dalal Street loses Rs 1.7 tn; loss on subprime woes hits Rs3.3 tn The Bombay Stock Exchange’s 30-share benchmark index Sensex on 16 August plunged by 642.70 points, its second biggest one-day fall in absolute value terms The Sensex opened with a huge negative gap of 416 points at 14,585 on the back of a sell-off in the global markets triggered by the subprime crisis in the US. The Sensex, after languishing over 500pts lower for most of the trading session, slipped again towards the close to a low of 14,345. The index finally ended with a hefty loss of 643 points at 14,358 – the second biggest loss in absolute terms in history.

The BSE Metal index slumped 6.5% to 10,300. The Bankex and Realty index plunged 5.5% each to 7421 and 6980, respectively. The Oil & Gas index hsed 4.5% at 7505. The Auto and FMCG indices dropped over 3% each to 4662 and 1855, respectively. Declining stocks beat advancing shares by a margin of over 2:1 – Out of 2,751 stocks traded, 1,869 declined, 842 advanced and 40 were unchanged today.

ALL FALL DOWN All the 30 index stocks ended in negative territory today. Tata Steel crashed over 10% to Rs 575. Bharti Airtel slumped nearly 7% to Rs 801. SBI, Hindalco and Reliance Communications plunged over 5.5% each to Rs 1,522, Rs 145 and Rs 495, respectively. ICICI Bank, Reliance and BHEL tumbled 5% each to Rs 832, Rs 1,739 and Rs 1,603, respectively. Reliance Energy and HDFC Bank dropped around 4.8% each to Rs 718 and Rs 1,094, respectively. Larsen & Toubro, ONGC, ITC, Tata Motors and Cipla slipped over 4% each to Rs 2,319, Rs 819, Rs 158, Rs 663 and Rs 183, respectively. Maruti and TCS shed 3.7% each to Rs 791 and Rs 1,088, respectively. Ranbaxy was down 3.4% at Rs 361. Bajaj Auto, Grasim, HDFC, Mahindra & Mahindra and NTPC declined around 3% each to Rs 2,310, Rs 2,793, Rs 1,885, Rs 658 and Rs 168, respectively.

VALUE & VOLUME TOPPERS Debutant IVR Prime led the value chart with a turnover of Rs 329 crore followed by Reliance (Rs 202 crore), Tata Steel (Rs 154 crore), DLF (Rs 150.30 crore) and Reliance Capital (Rs 116.70 crore). Nagarjuna Fertilisers topped the volume chart with trades of around 3.10 crore shares followed by IKF Technologies (1.44 crore), IFCI (1.43 crore), Bellary Steel (1.28 crore) and Reliance Natural (Rs 1.28 crore).

Mkts looking at cues from the US: Experts It was an extremely weak session for the markets as they ended in deep red tracking its global peers. The sub prime problem has impacted stock markets globally Dow has slipped below 13,000 level and Asia closed down 4-6%. Even European markets have opened in red. Also the yen has appreciated against the dollar and is trading at 115.

All the BSE sector indices were in deep red ranging between 3-5%. Banking, relaty and metal stocks are the worst hit space today. All the Sensex and Nifty stocks are in red. Top losers on the indices were Tata Steel & Sterlite down over 8%, Bharti Airtel down &VSNL down over 6% and BHEL & ICICI Bank down 5% each.

Sensex was down 642.70 points or 4.28% at 14358.21, and the Nifty down 191.60 points or 4.38% at 4178.60. Deven Choksey of K R Choksey Securities, says “As long as Sensex stays above 14,150, for the time being stability will take place around this level and maybe some recovery along with the global market recovery, as I would put it across. To begin with,on the upper side one will have to say that around 14,900 could be the crucial level after which only decisive upside will take place. But as of now, talking range wouldn’t make much sense because market opens with a gap. So if some positive cues coming today evening, then next morning one will find 300-400 point gap opening. So, to an extent, it is not making sense. But if one wants to take some kind of a cautious look, 14,150 would be the first level; if it breaks, then we will have some more selling coming in our market technically.”

Rajat Bose of rajatkbose.com says, “The notable feature of today’s price activity is that Nifty spot which was trying to cross 4,206 in the morning and it actually could not do that. This level is pretty much significant because this happens to be the100-day simple moving average level based on August 14 close. This level is acting today as a resistance and unless and until we see the Nifty crossing 4,206 and sustaining above that, I really do not think that we should be betting on a recovery immediately. On the other hand, the 200-day moving average levels are not very far away from here. 4,062 -4,050 are the levels for both, simple moving average and exponential moving average for the 200-day moving and that should act as a major support level as of now but whether one should buy into that support or not that is a difficult question because each time you thought of one should buy major support, you had a nasty surprise once you go into the evening. So I really do not have much confidence to buy. I even do not know whether one can do value buying here or not.

SV Prasad, Chairman of Chime Consulting says, “I’m not a great believer in market timings but I think I this kind of a market discretion is better part of valor though I always believe tops and bottoms are for fools. I still have a hold on for a little bit more to get clear signals, especially from the US markets. But if I were to stick my neck up out I would certainly look at Telecomm especially the leaders because their numbers are looking good maybe its good idea to look at some of the leading IT stocks as well because it looks like the rupee appreciation which was one way movement which we were seeing there seems to be a halt to that therefore these are two clearly sectors which I would clearly look at.”

He has other things to say too – words of caution. “I appreciate that we look at this as second biggest fall in terms of absolute points after May 2006. I think it would also be relevant to look at the percentage drops because if you are dropping from 14,000-15,000 levels, you are dropping to 600-points; is very different from if you are dropping from 11,000 by 800-points. I think these percentage numbers would perhaps give us slightly more different story and second a word caution -one, the fact that some of the midcaps and small caps have not fallen so much because sometimes what happens is that there are not enough volumes. So, sometimes, somebody wants to sell. But he or she or the institution feels ‘there are not going to be buyers, so I would much rather sell the large caps where the liquidity is lot more’. When one looks at these trends, one has to read between the lines and read them with lot more caution.,” he says.

Looking forward, Choksey suggests, “There is no need to go on a short selling at this point of time because one is awaiting major data from US market this evening and if this data turns out to be positive then definitely there is no way in which one would like to go short in this market on the contrary one would wait for some amount of recovery to come before selling the long position if one is holding on to so to a greater extent I would rather play safe at this point of time. But importantly in falling market, one gets an opportunity in specific stocks where the fundamentals are strong. So to a great extent one need not time the market but given the valuation at which they are available some of the selective sectors in some of the highquality stocks are available if they start availing at a lower price then it’s a time to buy, I would put it this way; not wholeheartedly but some percentage buying of one’s cash portfolio has to take place.”