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Sensex crashes by 1000 points

      Mumbai: The fall of sensex remains unbated as the country's benchmark indices witnessed the biggest-ever intra-day falls. By crashing more than 1100 points after a strong opening, recording over 200 points increase this morning, the sensex was below 10,000 pts. this noon. The trading was suspended for about one hour when the sensex plunged to 9827 pts. It has happened for the first time since May 17, 2004. The Bombay Stock Exchange (BSE) 30-share sensitive index has lost about 2,000 points in the last few trading sessions, following a controversy that was caused by a taxation circular put out by the Central Board of Direct Taxes (CBDT). However, the CBDT has refuted the suggestions that the draft circular was ambiguous.

    Expressing disappointment over the comment printed in the newspaper that the investor would "have to live at the mercy of the tax officials" the Board said that it was totally incorrect and inappropriate. "Whether a person buying and selling shares/securities, is a trader or an investor is a question of fact. In 1989, guidelines were issued for the guidance of assessing officers......Nevertheless, the question whether a person purchasing and selling shares/securities is a trader or an investor remains a question of fact. The Assessing Officer would have to take note of the totality of the facts and circumstances before reaching a conclusion," it said. The statement issued by the CBDT further states that this position has been made clear in paragraph 10 of the 1989 circular and in the last paragraph of the present draft circular. "The draft circular does not refer to FIIs at all. Nor does it purport to deal with any case or class of cases. The draft circular was put out to provide greater clarity for the guidance of assessing officers. CBDT rejects the opinion of tax consultants that the draft instructions are "ambiguous"," it says. The market seems to be in no mood to be convinced by the CBDT's statement. The National Stock Exchange Nifty was down about 350 points.

Sensex recovers some lost ground (Go To Top)

      Mumbai: After the historic crash that plunged the market below the psychological 10,500 mark, the mid-session witnessed recovery of close to 700 points as the day ended with the Bombay Stock Exchange closing at 10,517 with a net fall of 421 points. Nifty was down 165 closing at 3081after it had an intra day fall of 345 points. Trading that resumed at 12:56 pm after it was suspended for an hour for the second time in the indices history showed signs of recovering some lost ground after Finance Minister P. Chidambram asked the traders not to panic. All the sectoral indices were red as throughout the length and breadth of the market there were negative trends. As the day came to close, about 186 shares ended in positive territory, with 2082 shares facing the brunt and 29 scrips able to maintain status quo. Today's crash made the people remember the "manic Monday" that took place two years back on May 17 2004, when results of 2004 general election saw the Left Party emerging as a strong force. Today's 10 percent fall is, however, attributed to the "marginal calls and the liquidity deficit" by the by the market analysts. Chidambram's strong appeal and assurances, that market foundations are strong and that the banks would come forward to provide the marginal calls, led to the afternoon buying session mostly by the domestic buyers.

Don't panic, Chidambaram to investors (Go To Top)

      New Delhi/Mumbai: Finance Minister Palaniappan Chidambaram said on Monday that there was no liquidity problem in the Bombay Stock Exchange and asked the investors not to panic because of that slide in the stock markets. Shares crashed more than 10 percent earlier today, the worst one- day fall in points, but recovered to some extent after a one-hour market suspension allowed players to take stock of losses and longer-term investors to come in and buy shares. Chidambaram said he had spoken to the Reserve Bank of India (RBI) Governor and there was "no liquidity problem" and money would be provided to those who want to answer margin calls. "The fundamentals are strong, what has happened is a certain amount of nervousness in the market. My advice to retail investors is to stay invested, mutual funds are buying, they will continue to buy. I am told, FIIs (Foreign Institutional Investors) are invested for the long term here. FII have a lot of money invested in India they have invested it for the long term, there is no reason for any panic. There is ample liquidity, banks will provide money to those who require money to answer and respond to margin calls," Chidambaram told reporters in New Delhi.

    The share market tumble helped send the Indian rupee to its weakest level so far this year and the market regulator took to the television to reassure investors there was no risk to the banking system while the finance minister said there was no reason to panic. Traders and market analysts said that while the India economic boom story stood good with strong fundamentals, it was not enough to insulate the market from global vagaries and that the meltdown was simply waiting to happen. Ashok Ajmera, a Mumbai-based stocks consultant said the BSE's dream run was hyped and artificial and spared not even the strongest players.