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Carnage Continued....
Yesterday Indian Market witnessed sharpest fall of recent days during the first half of trading time. Market reacted to the news of US Federal reserve Chief Ben Bernanke's comments of " Central bank`s record loans to unblock credit markets were insufficient to prevent a deeper economic downturn".
All BSE sectorail indices ended on red, but some sectors deepns the problem having cut more from index level. Consumer Durables and FMGC take the worst hit down about 6.8% and 5.2% respectively. Some stocks shined the street irrelevant to fall like Ranbaxy and Tata Power both were the leading gainer of Sensex, gaining by 9% and 4.8% respectively. Ranbaxy was a star performer due to the news on market that US Department of Justice has withdrawn motion against the company, being probed against allegedly bringing adulterated and misbranded medicines into U.S. On the loosing side JP Asso and Wipro were the worst performer till the end of day, both sheds 10% and 8% respectively.
In Evening ( according to IST ), 3 central bank - ECB ( European Central Bank ) , BOE ( Bank of England ) & US Federal Reserve in a co-ordinated move cuts Interest rates by 50bps. In a move to handle situation in China , China's central bank also reduced Interst rates by 27 bps and reduced reserve requirment by 50 bps.
Asian Markets - All Asian market closed in deep red . Japan stock exchange key index Nikkei 225 closed down by more than 9% this is the worst fall of Nikkei 225 of last 21 year.
European Market - All Eurpean market recovred on the news of Interest rate cuts but closed in red having a minimum cut of 5% in Eupore's key stock exchange. Dow Future also traded on positive having a gain of 2% in evening.. but finally ended on red falling about 190 points.
Currencies & Energies- Rupee touched a new low of 6 years, it depriciated towards the level of 48.81 against dollar and fiannly recovred 75 paisa after the rate cuts annouuncement across globe and finally closes at 48.00 / US Dollar. Crude - Take the hit on the news of economy slowdown on global scale, it formed a new 10 months low at $86.05/barrel and fianally closed at 90.70 as dow recovred.
Turnover on 08th October , 2008
NSECash Rs.12819.42 BSECash-Rs.5135.12 Future Rs.57666.95
In its bleakest forecast in years, the International Monetary Fund (IMF) said the world economy was set for a major downturn with the United States and Europe either in or on the brink of recession.The IMF said a still developing financial upheaval — the most violent since the 1930s — would exact a heavy economic toll as markets wrestle with a crisis of confidence and global credit is choked off.
In its report, the IMF warned that credit conditions would remain very difficult, restraining global growth prospects. “The world economy is now entering a major downturn in the face of the most dangerous shock in mature financial markets since the 1930s,” the IMF said in its World Economic Outlook.
In hindsight, the IMF said lax economic and regulatory policies probably allowed the global economy to “exceed its speed limit”. At the same time, market flaws, together with policy shortcomings, allowed stresses to build.
The IMF slashed its 2009 forecast for world growth to 3 per cent, which would be the slowest pace in seven years, from a July projection of 3.9 per cent, and warned that a recovery would be unusually slow. It said growth this year would come in at 3.9 per cent, a touch below the 4.1 per cent projected in July.
In its latest report, the global economic watchdog warned that emerging and developing economies were also slowing, and, in some cases to rates well below trend.
China and India will experience slower growth on weaker exports, but should continue to be supported by solid private consumption, according to the report.
Growth in China is likely to remain at 9.7 per cent this year and 9.3 per cent in 2009, compared with 11.9 per cent in 2007, the IMF said. India will grow at 7.9 per cent this year and slow to 6.9 per cent in 2009, it said. The Indian economy grew 9.3 per cent last year.
Elsewhere in Asia, domestic demand has softened as high food and fuel prices have weighed on consumption.
Bank of Japan(BOJ), a central bank of Japan pumped 4 trillion yen into money market after current turmoil in Global Market and yestraday fall of more than 950 points in Tokyo Stock Exchange key index Nikkei - 225.The Bank of Japan (BOJ) pumped a record 4 trillion yen into the Tokyo money market on Thursday for the 17th consecutive day of emergency operations to facilitate interbank borrowing. The BOJ conducted its biggest ever single-day liquidity provision in the money market as credit conditions remained tight amid concerns over the course of the market despite coordinated interest rate cuts by six central banks in North America and Europe on on Wednesday.
Overnight call money rates remained at around 6 per cent for foreign banks and around 0.55 per cent for Japanese regional banks, both above the BOJ's official target of around 0.5 per cent, even after the BOJ injected 2 trillion yen into the market in the morning. This prompted the central bank to provide an additional 2 trillion yen in the afternoon.
Central banks around the world cut interest rates in Unpredictable moment this evening in the first such collective response to the global financial crisis which sent fresh waves of panic through stock markets, including that in India.
But the initial response of the markets was not encouraging: Wall Street turned negative and European stocks sank to a near five-year low, shrugging off the co-ordinated cuts.
Earlier in Mumbai, the sensex plunged below 11000 points for the first time since August 9, 2006 — a helpless, hand-wringing moment for investors who were still groping for answers to why the index had fallen by 10000 points in exactly nine months.
By evening in India, the world was witnessing a dramatic — and desperate — intervention led by the US Federal Reserve which cut a key interest rate — the federal funds rate — by 50 basis points to 1.5 per cent. This is the rate at which US private banks lend money to each other for overnight loans.
In the damburst that followed, China, the European Central Bank (ECB) and the apex banks in Britain, Canada, Sweden and Switzerland also cut key interest rates. Interest rate cuts are an age-old pill that is supposed to stimulate markets because the reductions make it easier for companies to borrow.
Will the cuts work this time? That was the question playing on the lips of the financial superpowers as Wall Street opened for trading a few hours after the central bank action. But the Dow Jones index fell in see-saw morning trade. In Delhi, late evening by then, the Union cabinet met to consider the global crisis and assess its impact on India. Asserting that India would grow at 8 per cent this year, finance minister P. Chidambaram said the government was watching the global crisis closely and would react swiftly to the needs of the market. He said the RBI had already taken steps to pump funds into the system and would do so again if required. US officials said this was the first time ever that the Federal Reserve co-ordinated a reduction in interest rates with other central banks. The closest thing to a precedent for today’s action came in November 2001, when the Federal Reserve and the European Central Bank announced a rate reduction on the same day. But those moves were nominally independent, and they did not involve any additional foreign central banks.
The European Central Bank had been reluctant to lower rates because policy makers there tended to see the meltdown primarily as an American problem with secondary ripple effects in Europe. But any lingering comfort outside the US evaporated last week, as money markets froze around the world and major corporations and banks across Europe began suffocating.
Before the rate cuts, Asian stock markets were clobbered with the Nikkei plunging 9.4 per cent to its biggest one-day fall since 1987.
In Mumbai, investors were groping for answers. “There is blood on the street; cold logic says that’s when you should buy stocks. But what do you do when it’s your own blood on the floor?” asked an investor. On January 10 this year, the sensex had peaked at 21206.77; today it hit a low of 10740.76 — a precipitous slide of 49.4 per cent this year. Even though the index clambered up to close at 11328.36, it was down by 3.14 per cent from Tuesday’s close. Domestic funds started buying stocks aggressively when the sensex toppled by 954 points to the day’s low around noon.
The rupee slid to its lowest level in five years at 48.75 to the dollar. However, the currency hardened on news of the rate cuts and closed at Rs 48. Gold continued to surge and hit an historic peak of Rs 13,820 per 10 grams
Originally posted here - The Telegrpah India
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