| Tuesday , August 25 , 2015 |Fried by dragon fire | |
| Our Bureau and Agencies | |
 A man watches share prices on a screen outside the Bombay Stock Exchange on Monday. (AFP) The sensex - the bellwether index of India's stock market - tumbled 1624.51 points, or 5.94 per cent, to 25741.56 on a day of frenetic trading. It was the biggest crash in absolute terms and only the second time that the main index had lost more than 1,000 points on a single day. But in percentage terms, it ranked pretty low as the 28th worst fall.  The market was spooked by the fact that Monday's plunge was the sharpest since the 7.25 per cent drop on January 7, 2009, that had been triggered by Satyam founder B. Ramalinga Raju's admission that he had padded profits at the software giant.The rupee sank to a two-year low of Rs 66.74 against the dollar - its lowest level since September 2013 - as markets wilted under fears of a China-led global economic slowdown. It closed at 66.65, down by 82 paise. Late in the evening in India, the bloody carnage swept across the US markets with the Dow Jones Industrial Average - the closely watched index of the New York Stock Exchange - tumbling 1000 points, or 6 per cent, to 15441 at the start of trading. But it quickly clawed back about 600 points, somewhat dimming worries of another domino effect tomorrow. Finance minister Arun Jaitley and RBI governor Raghuram Rajan tried to soothe worries of panicky investors who have been scrambling to dump stocks and scoop their money off the table. Jaitley said the selloff was "transient and temporary in nature" and blamed it on external factors. The finance minister expected the situation to stabilise as the macroeconomic indicators were strong. Rajan said: "India is better placed compared to other countries with a low current account deficit, fiscal deficit discipline, moderate inflation, low short-term foreign currency liabilities, and a very sizeable base of forex reserves." But the pep talk failed to quell concerns on the market that drove almost 400 stocks to record their 52-week lows, including frontline scrips like Tata Motors, Tata Steel, Vedanta and ICICI Bank.  Later in the evening, Jaitley said Prime Minister Narendra Modi had started monitoring the situation on the stock and currency markets and indicated that the government would not hesitate to adopt a slew of measures to stabilise the situation.China was the epicentre of Monday's global carnage. The tremors were first felt last month when a stock market crash precipitated a 2 per cent devaluation of the yuan in what was seen as a desperate move to rouse the drowsy dragon economy. Chinese stock prices had more than doubled in the past 12 months as millions of working-class and middle-class families bet heavily on inexpensive stocks in small companies, often borrowing money to do so, without looking at the fundamentals and further spurring the rise. On Monday, the Shanghai composite index closed 8.5 per cent lower, erasing all of the gains it had made in an extraordinary run this year. China is the world's second-largest economy as well as the biggest importer of commodities and a huge buyer of factory machinery. If its economy is affected, it could lead to a slowdown in those purchases. The mayhem spilled over to the commodity markets as well with the Brent and US crude oil futures hitting over six-year lows as concerns about a global supply glut fanned worries over weaker demand from the normally resource-hungry China. Copper, seen as a barometer of global industrial demand, hit a six-year low at $4,920 a tonne on the London Metal Exchange. The worries intensified after data released last week showed China's manufacturing activity had plunged to a 77-month low. Over the weekend, the Chinese authorities permitted state-owned pension funds to invest in the stock markets but it failed to improve sentiment.  Forex traders were confident that the rupee would not wilt further after Monday's 1 per cent decline. "Economies that are largely dependent on exports of raw materials are particularly hit hard by slowing global growth and crashing commodity prices. This is clearly reflected in currencies of nations like Brazil, Russia, Argentina and Malaysia, which have fallen more than 20 per cent in 2015. In contrast, commodity consumers such as India have had more stable currencies. The rupee has outperformed most of the other emerging market currencies by more than 20 per cent," said Sahil Kapoor, chief market strategist at Edelweiss Financial Services. http://www.telegraphindia.com/1150825/jsp/frontpage/story_39018.jsp#.VdvSXNSqqko |
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Fried by dragon fire. Bharatam Janam, stay away from the financial markets. Yoga, an option. NaMo, restitute kaalaadhan.
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