India's Black Monday Rocks Stock Market
Historically, the Indian Stock Markets have reacted negatively after the presention of the Union Budget. This year, it was no exception, but the fact that it was again a 'Black Monday' for investors is a little more hard to digest. The Bench Mark Sensex had lost over 900 points when the markets had opened on Monday, resulting in the sensex quoting below 17000 levels when the market had closed . This is the 4th biggest fall in the market during the current year so far, the first three happening on Jan, 21st, 22nd and Feb, 11th.
The apparent reasons attributed to the fall were the announcement of a massive waiver of farm loans to the tune of Rs.60,000/- Crores and a hike in the short-term Capital Gains Tax.
External conditions that added to the woes of the market were the worsening fear of impending recession in the U.S.A. and impact of sub-prime crisis on the Banking Sector. Besides the continuation of downward trend in the dollar vis-a-vis the major currencies, had further added to the above fears. Federal Reserve may announce again cut in the interest rate,but, whether it would arrest the downward trend of the U.S. economy, leave alone, a revival,is only a realm of thinking in the minds of the policy-makers, especially considering the fact that earlier cuts did not bring in any major upward changes in the economy.
In the light of the above, the breadth of the market was highly negative and the undertones weak. Not even a single sector had posted any gains, resulting in an across the borad fall in the marker.
The Government is not likely to interfere with the market mechanism and utlimately it may find its equillibruim within the operations of the market forces and not through any extenal intervention.
Tags: India , Sensex
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