• PAGE ONE
• INDEX
• HOME

Sensex feels tremors of US attacks; drops 117 points

Our Bureau

MUMBAI, Sept. 12

STOCK prices in India and major Asian markets dropped on Wednesday in sympathy with the falling World Trade Center twin towers following unprecedented terrorist attacks on the US on Tuesday morning.

The fall in local stock prices could have been bigger, as was evident in Japan and Hong Kong markets, but for the preventive measures taken by the Securities and Exchange Board of India (SEBI). SEBI tightened the market-wide index circuit-breakers and re duced dummy circuit filters (for order verification) on 53 individual securities. The limits were tightened to 10 per cent from 20 per cent ``till further orders'' in an apparent move to arrest free fall in stock prices as was feared by many marketmen.

The terror in America reflected in nervous selling in India, as elsewhere, pushing the benchmark BSE-30 shares sensitive index (Sensex) hit new 34-months low. The Sensex dropped 196 points to hit intra-day low of 2954 before recovering partially to close at 3032.71, losing 117.69 points or 3.74 per cent. At NSE, the S&P CNX Nifty breached 1000 mark to close at 982.20 losing 41.2 points or 4 per cent. All the sectoral indices were marked down with most technology stocks hitting ``lower'' circuit breakers while select old economy stocks such as ACC, HLL, ITC L&T, and RIL declined moderately.

Widespread nervousness pulled Japanese benchmark Nikkei-225 down 683 points to close at new 17-years low at 9610. Hang Seng Index dropped 8.87 per cent to close at 9493 losing 923 points.

In its flight to safety, retail investors preferred selling equities while institutional investors largely adopted a wait-and-watch approach with modest purchases in old economy stocks, dealers said. Seasoned investment bankers and fund managers said it is too early to say what impact the American tragedy could have on portfolio investments by the foreign institutional investors (FIIs).

Sun F&C Asset Management CEO, Mr Nikhil Khatau, said that this (terrorist attacks) has been a great shock and the enormity of it is yet to sink in. ``We are likely to see promises by the US to provide funds for the affected businesses and spend huge amou nt on defence. This is likely to be very well received by the market,'' Mr Khatau said.

FII sentiment is likely to be impacted as funds may fly from risky (equities) assets to safe avenues such as cash or government bills. ``Generally, when there is chaos at home, there is a tendency to reduce outside exposure,'' dealer said referring that funds may be repatriated from emerging markets.

FIIs are unlikely to press panic sales as was evident in Wednesday trade with modest decline in volumes. ``The terrorist attacks on US might lead to radical action worldwide forcing economic policy changes in few countries. Hopefully, India may be isolat ed,'' Mr Pashupati Advani, Advani Shares, said.