Monday was yet another bearish day on the bourses. Global developments and the rupee decline sent the Sensex plunging 425.41 points, or 2.6 per cent, to breach the 16,000 level and close at 15946.10.
The Nifty lost 127 points, breaching the 4800 level, to close at 4778.85, down 2.6 per cent. Experts observed that the worsening global situation was prompting investors to pull out of emerging markets and India was no exception.
FIIs were net sellers by Rs 743 crore and DIIs (domestic institutional investors) net buyers to the extent of Rs 596 crore. Retail investors on the BSE bought Rs 42 crore worth of equity in the net.
“Strengthening bond yields in the Euro zone, the question on whether ECB would intervene in Spain and Italy and the impasse over how to announce that no headway had been made by the members of the committee responsible for suggesting $1.2 trillion budget cuts in the US have made matters worse,” said the CIO of a mutual fund house.
The DISCONNECT
Some experts, however, pointed out that that there was a disconnect between rupee depreciation and the present FII outflow data when compared with the post-Lehman period.
The rupee had depreciated 20 per cent then for an outflow of $14 billion, whereas it has already depreciated around 15 per cent for an outflow of $3 billion from August 2011 to date. This meant that Indian companies, especially oil importers, were being hit on the rupee-dollar leg of the transaction.
Dalal Street was steeped in gloom, with the salaries of staff at brokerages beginning to touch 2005 levels. “Please suggest an alternative career I can pursue,” said a dealer at an Indian brokerage.
“Brokerage houses, especially those in the institutional business segment, have cut pay for the second time in the last 3-4 months,” said a fund manager of an Indian mutual fund house.
Said Mr Ashish Choudhary, a retail investor: “I have become cautious of trading on a day-to-day basis.” All indices on the NSE and the BSE were in the red and the volatility index VIX rose 7.63 per cent on Monday to close at 28.61.