A maturing market amid the mayhem
Sensex loses ground; Satyam jumps on renewed hopes
The Sensex closed nearly 2 percent down on Monday as worries over the world economy hit investor sentiments.
The benchmark closed at 8160.4, dragged down by index heavyweights Reliance Industries (down 1.4 percent), ITC (down 4 percent) and Hindustan Unilever (down 3.3 percent).
Jaiprakash Associates and Ranbaxy were among the top Sensex losers, falling over 5 percent and 4 percent respectively.
The benchmark index extended losses after a weak opening in European markets. Japan’s Nikkei struck a 26-year low on the fate of U.S. banks and renewed crisis in the United States as the government stepped in with another round of relief measures for AIG and GM.
The banking sector felt most of the heat with its index slipping 2.78 percent. Karnataka Bank dropped 8.18 pct, SBI slipped 4.8 percent and ICICI Bank ended 2.3 percent lower.
Shares in Satyam Computer closed 15.8 percent higher after the company kicked off a bidding process to sell a majority stake in itself and two potential suitors quickly confirmed their acceptance.
Larsen & Toubro shed 3.1 percent to Rs 561.80 after the company said it will go ahead and submit an expression of interest for Satyam.
There are several factors affecting market sentiments. To begin with, there is continuous selling pressure from FIIs (net FII outflow for March has topped $600 million, while that for the year till date has crossed over $2.2 billion).
Another factor is the recent volatility in the rupee, which is raising the cost of servicing external debt.
Add to this the World Bank’s confirmation that developing countries will face a financing gap of $270-$700 billion to deal with the effect of the global crisis.
Do you think the weakness in global markets and the coming general election will keep investors from building large positions?