Mumbai: Equity markets sank to a 20-month-low as global markets continued to reel under global slowdown, erasing Rs 1.84 lakh crore of investor wealth.
The BSE benchmark index Sensex on Wednesday plunged by 650 points intraday taking the index below 24,000-level. But it recouped its losses in later in the day to end the session 418 points lower at 24,062.04. The Nifty plunged 125.80 points to 7,309.30.
The rupee also touched a new low of Rs 68.01 against the dollar, a 29-month low, in the day but managed to recover some losses to end to at 67.95 — 23 paise lower than Tuesday’s rate.
“The rupee, however, is almost mid-way across the spectrum of currencies that have been depreciating so far this year. At 2.28 per cent, the rupee performed better than South Korea, Argentina, Turkey, Mexico, Russia and South Africa,” said Madan Sabnavis chief economist of Care Ratings.
The rupee will remain volatile as long as these global sentiments prevail and crossing the next barrier of Rs 69 cannot be ruled out in the very short term.
However, a return to equilibrium is expected in case the speculative forces do not play out for a long time, he said
“Panic gripped the markets and traders were forces to sell on margin call whilst some sold to buy back at lower prices,” said market analyst Ambareesh Baliga.
Domestic institutional buyers were not present to bailout the market when foreign institutional investors (FIIs) began offloading their holdings. “There will be some crumbling for a few days but it has nothing to do with India.
Valuations are decent in Indian markets but no one is looking at valuations because of the state of panic. It is an opportune ty to buy for those who have idle cash. The fall in oil and commodities is good for India as companies ae in asset building mode,” said Mr Baliga.
Mr S.P. Tulsian, a veteran market analyst, said global markets fell three per cent whilst Indian markets fell two per cent so there should be no complaints. All markets are oversold so stability will return.
Raghuram Rajan: Investors will come back to India
RBI governor Dr Raghuram Rajan had a positive view on the fall of the Indian stock markets on Wednesday and said the Sensex came back quite a bit in the last few hours of trading.
He was responding to a question on the global volatility and the nervousness in the Indian markets posed by CNBC in Davos. Dr Rajan said “They (FIIs) take the money off the table in a hurry when they are doing it everywhere, but then they come back, and so my sense is that after the initial volatility, things will stabilise, people will try and look for the good, stable emerging markets.”
On the rupee he said, it has been relatively strong amongst emerging market currencies, “so we are affected by the same kind of jitters, but if you are an emerging market, you focus on the fundamentals, try and get inflation down, and get your current account deficit down, keep fiscal on target, do all the good things, and then people reward you.”
