Dec. 9: The Sensex tanked over 500 points intra-day as there was panic selling when brokers asked for margin calls, and many offloaded stocks when clients could not pay up. The markets had been weak ever since the 2G scam broke and the telecom stocks corrected, said
Mr Pradip Hotchandani of Anagram Securities. This was followed by scam after scam. When LIC Housing Finance was dragged into the bribes for loans scandal, it was like the last straw, he said.
Indian companies have a good reputation for corporate governance and the involvement of LIC Housing and other companies shook the confidence of the market. Then the Securities and Exchange Board of India (Sebi) on Tuesday banned a number of companies for insider trading. Most of those stocks tanked on Wednesday and continued to loose on Thursday.
The markets opened positive on Thursday but as brokers made margin calls and clients couldn’t pay they offloaded other stocks too that were pledged with them. This created panic in the market and shares across the board were sold. There was no counter-buying by anyone.
The Sensex closed down 454.12 points at 9,242.36 while the Nifty closed below the 5800 mark at 5,766.50 down 137.20 points. “After this week’s steep correction, last week’s recovery appears more of a flash in the pan. Overall, the undertone is pretty weak amid the barrage of bad news hitting the market all of a sudden,” said Mr Amar Ambani of India Infoline Group.
Brokerage house Shar-ekhan said, “Bears were charged up all day and there were fears that the foreign fund withdrawal could lead the Indian markets to fall drastically. Several stocks locked at lower circuits, which pushed the BSE midcap and smallcap indices down by 4.48 per cent and 5.92 per cent respectively.