The Bombay Stock Exchange’s benchmark Sensex may have registered its biggest ever monthly fall in the last 16 years when it sank to a 15-month low of 13,405.54 points on Monday, but the worst is still not over if a survey of fund managers is to be believed.
The country’s key stock index could provide a return of less than 10 per cent over the next 12 months, brokerage firm CLSA said on Monday, citing a majority of fund managers in a poll. The Sensex has already dropped 33 per cent this calendar year, its worst six months since the benchmark was introduced in 1979.
In fact, according to 31 per cent of the participants in the poll, a further downside in the benchmark index can be expected as rising commodity prices and higher interest rates hurt growth in Asia’s third largest economy.
“India-dedicated funds and mid-sized funds are relatively bearish,” CLSA said, adding that 57 per cent of non-India dedicated funds were underweight on the Indian market.
NO END TO BAD NEWS...
The survey could not have come at a more inopportune time as investor sentiments had already been dampened by high inflation and a resurgence in global crude oil prices which again surged to over $142 in Asian trade.
Even during Monday’s trade session, fund houses and investors off-loaded holdings in refinery, bank and realty segments following projections of a fall in economic growth.
Germany-based Dresdner Bank said that the soaring inflation and high interest rates are expected to take a toll on the Indian economy, bringing down its GDP growth rate to 7.5 per cent this financial year as against the 9 per cent clocked in 2007-08 .
Dresdner Bank, the banking arm of global insurance major Allianz Group, also observed that the Indian economy had already lost momentum this year with production growth slowing substantially in the first four months of 2008.
This projection is much lower than the Finance Ministry’s expectations of 8-8 .5 per cent GDP growth, and is the second major one since research firm Standard and Poor’s slashed its forecast to 7.8 per cent last Thursday.
SENSEX DROPS BY 340 PTS
The downgrading of GDP growth forecasts, coupled with global oil rates heading northwards again, hit the BSE’s bellwether hard, pulling it down by another significant 340.62 points to register its biggest ever monthly fall in the last 16 years.The 30-share Sensex settled the day at 13,405.54, showing a loss of 2.47 per cent, from its previous close. Similarly, the NSE’s 50-share S&P CNX Nifty fell by 96.10 points, or 2.32 per cent, to close at 4,040.55.
Traders said that the ongoing political uncertainty at the Centre had a sentimental impact on markets too. The Left supporters of UPA Government had threatened to withdraw support if Prime Minister Manmohan Singh pushed ahead with the Indo-Us Nuclear Deal.
“The only segment that is showing some resilience is the services sector, which is still recording double-digit growth rates,” Allianz-Dresdner Economic Research said in its report on the economy and markets. AGENCIES
MANIC MONDAY
DOWN 340.62 PTS AT 13,405.54 CLOSING LEVEL IS A 15-MONTH LOW JUNE ’08 ENDS AS BIGGEST LOSING MONTH IN 16 YEARS
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