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Bangalore: Indian shares fell six per cent on Monday to their lowest close in nearly seven months, as worries grew about a global credit crisis after the bailout of Bear Stearns and a US cut in its discount rate.
No. 2 lender ICICI Bank fell 13.8 per cent to Rs757.40, its lowest close in more than a year, on concerns about the bank's total exposure to the derivatives market, traders said.
Reliance Industries, India's top listed firm, lost 6.1 per cent to Rs2,180.60, taking their losses to more than 24 per cent this year. Reliance and ICICI shares constitute about a quarter of the main BSE index.
The 30-share index lost 6.03 per cent, or 951.03 points, to 14,809.49, the lowest close since August 24, 2007. It was the second biggest points fall since losing 1,408 on January 21. All its components ended in the negative territory.
"We are completely linked to the global markets," said Gajendra Nagpal, chief executive of Unicon Financial. "There's a lot of liquidity sitting on the sidelines but no one wants to be the first to enter the market."
Foreign funds have been net sellers of $3.4 billion of Indian equities this year, after buying a record $17.4 billion in 2007.
"It's a kind of forced selling amid the turbulence in the global markets," said D.D. Sharma, vice-president at Anand Rathi Securities. "The worsening conditions of the financial system in the world is having a very bad impact on the Indian markets."
Brokerage India Infoline said there could be more pain left in the financial system and the Fed's action could just be an indication of how worse the credit crisis had turned out to be.
Banks and financial shares were the worst hit, trailing the weak sentiment on financials in the offshore markets.
HDFC ended 11.1 per cent lower at Rs2,225.55, while HDFC Bank closed with a loss of nearly six per cent at Rs1,238.50.
Top lender State Bank of India shed 4.7 per cent to Rs1,633.40. The bank's rights share sale, which was launched on February 18 hoping to raise $4.2 billion, closes today.
The NSE index fell 5.11 per cent to 4,503.10, its lowest close since September 17.
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