Stocks plummet to a 22-month low

It was a bearish day from the beginning. The Bombay Stock Exchange opened 4 per cent or 163 points lower than Monday’s close of 3605. Early morning trading saw the Sensex dive further to a 22-month low of 3458– a fall of 310 points. Akrita Reyar looks for reasons for the slump.

By Akrita Reyar | Last Updated: Sep 24, 2014, 16:09 PM IST

It was a bearish day from the beginning. The Bombay Stock Exchange opened 4 per cent or 163 points lower than Monday’s close of 3605. Early morning trading saw the Sensex dive further to a 22-month low of 3458– a fall of 310 points. Akrita Reyar looks for reasons for the slump. The market was in a red Tuesday morning. An 8% fall, after all, had pulled down indices to their lowest in two years. But when analysts were questioned about the reason for the poor showing, they just shrugged their shoulders. It could be anything. Dhirendra Kumar, Director, Value Research says, “It’s panic. It’s too much noise. It’s also a clear reversal of the trend we were witnessing so far.” Saumitra Chaudhuri, Economic Advisor, ICRA tends to agree. “ It’s definitely panic. But what kind of panic, we don’t know,“ says Chaudhuri. The plunge came after the SEBI decision, Monday night, to debar seven brokers from the management of the Bombay Stock Exchange. This is one of the measures SEBI has taken to regulate operations of the BSE after last week’s fluctuations. A previous remedial measure had claimed the BSE President Anand Rathi’s job. The Nasdaq hasn’t been fairing any better either. On Monday, it fell below the 2000 mark. Dhirendra Kumar attributes the fall to the above reasons. He feels,” The trend is short term and valuations continue to be healthy. Only, it is bad for the day to day trader. People are sitting on the side waiting for somebody else to take the first step.” Chaudhuri, however, feels the rot runs deeper. He says, “ The problem is the finger is not pointing to the person responsible for the stock market crisis. So instead of a single person, the entire stock market is being punished.“ And what does the future hold...... Dhirendra says, “Things are bound to bounce back. It is going to be U-turn for brighter things to come.” Chaudhuri disagrees. “Till such time that the real culprit is brought to the book, the bearish trend may continue. And when it will come to an end, God only knows.”