The BSE’s Sensex hit a low of 16,951.50 during the day, while the NSE’s S&P CNX Nifty slipped to a low of 4977.10 in the late-afternoon trade.

As the BSE index had dropped (2,050 points) by over 10 per cent, the circuit breaker was applied and trading suspended at 2 pm. When trading resumed after some time, Sensex did recover some lost ground with some government funds chipping in to bring in some sanity. By the end of the day, the Sensex closed at 17,605.35, the biggest single-day loss ever at 1,408.35 points, shaving off over Rs 6 trillion (Rs 6,00,000 crore) from the investors’ wealth. The Nifty closed at 5,208.80, down 496.50 points.

Uncle Sam’s woes
Although the Indian economy continues to be fundamentally strong, Monday’s plunge was triggered by concerns in the global investor community about a recession in US, the world’s largest economy.

The Sensex opened on Monday with a negative gap of 94 points at 19,014 and sank deeper into the red as the day grew. In fact, the previous biggest single day fall in terms of points was on May 18, 2006 when the Sensex had plunged 826 points or 6.75 per cent to close at 11,391 points.

Citigroup and Morgan Stanley, hit by mortgage-related losses in the US, were aggressive sellers during the day.
The investors have lost over $300 billion (Rs 11,85,285 crore) over the last six days, with more than half of the loss coming from Monday’s session.

Trading on BSE was again suspended at 2:50 pm owing to a technical glitch.

The reasons
Commenting on the mayhem, Rajiv Anand of Standard Chartered Mutual Fund said: “It’s an amalgam of global concerns and because money is stuck in initial public offerings at the moment, and on overextended positions of investors aiming to make quick money.”

Enam Securities Chairman Vallabh Bhansali said, “It’s a course correction. One may say it is too much of a correction, but then as we have witnessed in the past, corrections are always like this.”

When pointed out that the correction has been across the board, he said: “It is not just one factor of weak global trends, but also the fear of investors to cover up positions that triggers such decline.”

Weak breadth
The market breadth was weak at BSE with as much as 2,658 stocks declining as compared to just 140 that rose during the day, while a total of 14 shares remained unchanged. All the members of 30-share BSE Sensex pack settled with losses.

Reliance Industries (RIL), the biggest company on the index by market value, shed Rs 255.30 or 9.1 percent to close at 2,544.20. In terms of percentage, NTPC was the worst hit with a fall of 15.07 per cent, followed by Reliance Energy (down 14.79 per cent), ACC (14.53 per cent), ACC (14.53 per cent), Reliance Communications (13.84 per cent) and Grasim Industries (13.19 per cent).

Bucking the trend, Satyam Computer posted nearly five per cent gains after the IT major reported a 29 per cent rise in consolidated third-quarter net profit on continued growth in sales.

Edit: American fever