Indian markets fall in Lehman aftermath

Web posted at: 9/18/2008 1:26:48

Source ::: IANS

Mumbai • Indian equities markets continued to reel from the effects of the US financial tsunami. At the close of
trading, the 30-share benchmark sensitive index (Sensex) of the Bombay Stock Exchange (BSE) fell to 13,262.90,
down 255.90 points or 1.89 percent over its previous close of 13,518.80.

The broader based 50-share S&P Nifty of the NSE also fell to finish at 4,008.25, down 66.65 points or 1.64 percent
against its previous close on Tuesday at 4,074.90. The BSE mid-cap index also fell 77.62 points or 1.49 percent to
close at 5,139.63 points. The BSE small cap index fell to close at 6,214.75, down 74.66 points or 1.19 percent over
its previous close at 6,289.41.

“Every one knows that the ripple effects of the Lehman collapse will continue to be felt for quite some more time so
the mood is so bad that there are simply no genuine buyers in the markets,” said Jagannadham Thunuguntla,
equity head of the Delhi-based NEXGEN Capitals Ltd. NEXGEN is the securities arm of India’s fourth largest share
brokerage firm, the SMC Group. “The only buyers were bears trying to cover short positions and some institutional
bottom fishing,” Thunuguntla said.

“In December last year, when the Sensex at 21,000 was at its peak, one share of Housing Development and
Infrastructure Ltd (HDIL) was selling at Rs1,500. Today you can buy shares of almost all the big realty companies
included in the BSE realty index for Rs1,400,” Thunuguntla said. HDIL is one of the stocks included in the BSE’s
realty sectoral index. The other realty stocks including that of HDIL that could be bought (one each) yesterday for
Rs1,400 are: Ansal Properties & Infrastructure Ltd, DLF Ltd, Indiabulls Real Estate Ltd, Omaxe Ltd, Parsvnath
Developers Ltd, and Unitech Ltd.

“Lehman Bros had a lot of exposure in realty companies such as DLF and Unitech which is the reason why there are
no buyers even when these stocks are selling at 80-85 percent below their peaks,” Thunuguntla said. Any major
recovery in the short term is unlikely as more banks across the world such as Citibank or Bank of New York come
under pressure, he said.

“The financial world is today much more interlinked because of third party guarantees and counter guarantees so that
when entities such as Lehman collapses the ripple effects can spread very wide and may take a long time to fully play
out,” he said.

The Russian market collapse erased any positive cues that could have come from the news that the US central bank
had agreed to bail out insurance giant American Insurance Group (AIG), he said. Sectorally, the realty sector was the
worst hit with the BSE realty index losing 4.13 percent yesterday. Banks, metals and fast moving consumer goods
were the other top losers, although all sectors showed losses.

Of the Sensex stocks, only 7 finished in the black. The top gainers were Tata Motors, up Rs19.30 or 4.84 percent to
Rs417.70. Oil and Natural Gas Corp finished at Rs979.35, up Rs26.65 or 2.80 percent. Wipro Ltd closed at
Rs399.75, gaining Rs8 or 2.04 percent. ACC Ltd gained Rs9.85 or 1.69 percent to end at Rs592.60.

Sterlite Industries was the top loser shedding Rs38.40 or 8.04 percent to close at Rs439.30. Ranbaxy Labs, on
reports that the Federal Drug Authority of the US had banned 30 of its drugs, fell to Rs379.10, down Rs26.80 or 6.60
percent. ICICI Bank dipped to Rs560.30, down Rs.31.05 or 5.25 percent. ITC Ltd slid to Rs184.40, losing Rs9.85 or
5.07 percent. The sentiment was clearly bearish with 1,740 or 64 percent scrips declining, 886 or 33 percent
advancing and 86 or 3 percent remaining unchanged.