Stock market benchmark Sensex eased worries of panicking investors on Friday by checking through-the-day losses on US markets fall in a highly volatile day and closing at 17,305.87, down 387.31 points, or 2.19 per cent. The National Stock Exchange index Nifty closed at 5,224.25, down 107.75 points or 2.02 per cent.
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The day didn't start any brighter for Asian stock markets as US index Dow Jones fell overnight and saw its steepest decline since 2008 when recession had hit the global economy.
Earlier, markets remained volatile in the afternoon trade as Sensex tested 17,000-level by maintaining losses from between 500 to 650 points.
US markets contributed to the downfall of the 30-share Bombay Stock Exchange benchmark, as around 12.30 pm it even plunged below 17,000 for the first time since May 2010.
An estimated amount of Rs 2,50,000 crore was wiped off from the total investors' wealth, measured in terms of combined value of all listed stocks, in just about three-and-a-half hours of trade.
Investors panicked and exited the stock market, even as analysts said this is the best time to buy in stocks and hold on to them. The tried-and-tested rule didn't find any takers as Reliance Industries (RIL), Infosys, Tata Consultancy Services (TCS) and Tata Steel bore the brunt of panic selling - their scrips falling between 3 per cent to 6 per cent.
The 30-share benchmark index fell to as low as 16,990.91 points in early afternoon trade, registering a fall of 702 points or about 4 per cent. At 1 pm, the BSE index was trading at 17, 114.92, down 578.26 points. Broad-based National Stock Exchange Nifty was trading at 5144.30, down 187.50 points.
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Investors sold off heavily the stocks of Indian IT companies in a weak market and blue-chips like TCS, Infosys and Wipro plunged sharply on the bourses.
The country's largest IT exporter TCS was trading 5.7 per cent down at Rs 1,034 in mid-day trade, while Infosys was also down 5.5 per cent at Rs 2,559.60.
Among other IT majors, Wipro was down 3.6 per cent at Rs 362.20. The three IT stocks were among the biggest losers in the Sensex pack.
The US is among the biggest markets for Indian IT companies and any trouble in the American economy is considered a big negative for them.
Earlier, the market had opened sharply down on Friday morning with a fall of as much as 483 points within minutes, amid concerns over the US economy moving towards recession and mirroring the overnight tremors in the US market. Weak Asian markets also aided to the fall on Indian bourses.
The US market recorded its worst fall since early 2009 on Thursday amid fears that the world's largest economy was heading towards another possible recession. The Dow Jones industrial average saw its ninth-steepest decline, falling 512 points on Thursday.
Asian markets too opened lower in early trade on Friday with Japan's Nikkei 225 stock average sliding 3.4 per cent to 9,335.26 and Hong Kong's Hang Seng shedding 4.1 per cent to 20,989.28.
Australia's S&P/ASX 200 was off 4 per cent at 4,107.20, Taiwan's Taiex sank 4.2 percent to 7,967.38 and Seoul's Kospi dropped 2.8 per cent to 1,961.79.
Analysts said that investors are concerned over possible impact on Indian companies due to the continuing uncertainty in the US and the overnight fall in the Wall Street, which witnessed its worst fall in about two-and-a-half years on Thursday.
They said there are concerns that exports could be affected, while the companies would have to borrow at high interest rates in India, as foreign borrowings could be difficult.
Brokers said sentiments on the domestic bourses turned further bearish after Asian stock markets plummeted by nearly 5 per cent following overnight losses on the US market.
In addition, rising food inflation and fears of hike in interest rates were dampening factor, they said.
However, some analysts saw today's fall as a buying opportunity and dismissed any panic-like situation.
"The uncertainty in the US and European markets will bring in more money in emerging markets like India as the valuations are cheap here. (It's) not a panic situation, and rather it is a buying opportunity," CNI Research's CMD Kishor Ostwal said.
"Indian market opened up following the global trend. Yesterday, US market fell by over 500 points and European market plummeted nearly 4 per cent, other Asian markets also fell," Ostwal said.
"But this will create a value buying opportunity for the investors who were waiting for the fall," he added.
With agency inputs