Indices tumble as stock markets across the globe turn weak

06 October 2005

The tremor which started in the US markets day before yesterday became stronger yesterday and pulled down stock market indices across the world today. Indian stock markets were no better off despite yesterday's correction and the frontline indices lost well over 2 per cent each.

Latest US economic data suggest that the country's economy is heading for a tough period as consumer confidence is fading. Concerns about inflation and higher interest rates have increased. Weakness in the US economy would affect global growth and these concerns are reflected in the weakness across stock markets. All major Asian stock markets declined substantially today and most European markets are trading with heavy losses.

The indices opened with a negative gap from yesterday's closing and lost well over a per cent each within minutes. After trying to recover for more than half-an-hour, fresh selling pulled down the indices further. From then on it was a steady decline for the rest of the session as most of the frontline stocks came under intense selling pressure.

Metal stocks were among the worst affected on reports of a short term pressure on steel prices. Any decline in global growth could lead to a decrease in metal prices. SAIL was the biggest loser, closing the day more than 5 per cent lower. Tata Steel lost close to 5 per cent. Aluminium major Nalco lost well over 4 per cent.

Banking stocks continued their weakness from yesterday. The sharp fall in ADR prices led to further decline in ICICI Bank. The stock lost close to 5 per cent for the second straight day. HDFC Bank closed almost 3 per cent lower while SBI lost over 2 per cent.