Investors lose Rs 6 lakh cr in one month

The whirlwind of nervousness that began sweeping stock markets around the world on February 27 continued its onslaught on Monday, pulling down stock prices and blowing away investors’ wealth. The sensex tanked 471 points, signifying the fifth biggest point-wise fall in the index’s history. The sensex ended the day at 12,415, its lowest close in four months and 16% off its February 9 peak of 14,724. Investors have lost nearly Rs 6 lakh crore since that peak. Portfolio investors had sold shares worth nearly Rs 2,750 crore last week; Monday’s provisional figures showed a net outflow of Rs 732 crore. Market players say the worst may not be over as foreign investors, mainly opportunistic hedge funds, continue to cash out. There were three main factors behind Monday’s crash. First, a number of hedge funds operating in Indian markets have invested money that was raised on cheap yen debt. With the Japanese yen rising against the US dollar, this money suddenly became more expensive, spurring these funds to cash out of the market. This led to edgy sentiment, rampant declines and a free fall. The second reason stemmed from the first — as the market tanked, it triggered stop-loss sales (designated price points for sale so as to minimise losses), which in turn created pressure on margin money for leveraged buying. All this heightened the final reason for the fall — a lingering unease with the budget. The absence of good news in the budget had created negative sentiment which got crystallised by the rumbling downturn.

SOURCE : DNA MONEY