Mayhem on Dalal Street
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Yesterday, the Indian stock exchanges lost Rs 2.25 lakh crore in value (Rs 2.25 trillion), the biggest drop in the 150-year history of the Indian stock exchanges. The country’s premier index, the Sensex, lost 826 points (6.7%) to close at 11,391. Nifty, the more broadbased index, also lost 6.7% to close at 3,388.
The markets have been driven up by FIIs (Foreign Institutional Investors) doubling the Sensex in the past 1 year from 6,438 to a high of 12,671 two weeks ago. FIIs have pumped in Rs 45,000 crore (Rs 450 billion) last year and about half of that in the first few months of this year.
The reasons being given for the crash are the sale of Rs 7,300 crore (Rs 73 billion) shares by FIIs in the past 1 week, an expected increase in interest rates by the US Feds, a crash in the international commodity prices, and the straw which broke its back seems to be a government circular which was interpreted that FIIs should be taxed. P Chidambaram, the country’s Finance Minister, issued an evening press release denying the latter.
A decade ago powerful individuals could sway the market and everyone would scream that small investors have lost their retirement savings but this time most investors have suffered only paper losses and are still in the black. The real big losers, paper losses again, are the business tycoons. Reliance Chairman Mukesh Ambani lost Rs 11,600 crores (Rs 116 billion) in personal wealth yesterday.
Notes
Sensex is the index of the BSE (Bombay Stock Exchange) analogous to to NYSE
Nifty is the index of the NSE (National Stock Exchange) analogous to NASDAQ
Dalal Street is where the BSE is located and is analogous to Wall Street
1 Lakh - 100,000
1 Crore = 100 lakhs (10 million)
US$ 1 = Indian Rs 45.50
The havoc continues. Sensex dropped 453 points today to 10,939.
If I could lose that much personal wealth, I would be one happy guy.
Speaking of M. Ambani, how much did the feuding brother lose?
Bloodshed again. Sensex dropped 457 points today to 10,482.
- A midday drop of 1,111 points tripped the exchange’s circuit breakers and suspended trading for an hour.
- This is the second time in history that the ciruit breakers have been applied.
- All this was after a smart opening in the morning with a 133-point rise.
- The crash coincides with the 2nd anniverary of the Congress-led UPA government.
Anil Ambani lost much more when he decided to split from his brother.
It’s been a 22% slide from intra-day high of 12671 to a low of 9826 in just 7 trading sessions.
According to Indian dailies, the police in Bombay are on the lookout for suicides, keeping a watch near lakes and canals, possible places where investors and brokers in distress could head to kill themselves.
[...] This was the biggest drop in the 150 year history of the Indian stock exchanges - it’s Mayhem on Dalal Street, according to rantlust.com. A midday drop of 1,111 points tripped the circuit breakers on the exchange. The Indian Finance Minister thinks this is a normal correction and declined comment. [...]
The Dalal Street types seem to be on steroids or something. The market gains 6.9% now.
Dear member, The actual and true story about Harshad Mehta can be seen here Harshad Mehta It has very beautifully described every bit of 1992 scam.