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Global markets roiled as Spain hurtles towards bankruptcy

Global gloom hurt the sentiment in the Indian markets on Monday, sending stocks reeling.

Global gloom hurt the sentiment in the Indian markets on Monday, sending stocks reeling. The fall in Indian equities was amplified by a sharper fall in Asian and European equities. Leading European equity indices lost more than 2% each with FTSE down 135 points or 2.38%, the CAC 40 and the DAX also deep in the red, shedding nearly 3% each. In Asia, the Hang Seng lost a massive 587 points or 3%, while the Nikkei was down by nearly 2% or 162 points. The benchmark indices of Taiwan and South Korea also lost nearly 2% each.

The US markets also hinted at a bearish start with the S&P 500 futures expiring in September losing 1.4% to 1,339. Meanwhile, Dow Jones Industrial Average futures slipped 210 points, or 1.6% to 12,563.

The 30-share Sensex fell 281.09 points or 1.64% to close at 16,877.35, while the broader 50-share NSE index lost 87.15 points or 1.67% to close at 5,117.95 ? their lowest level in nearly a month. Indian rupee slipped to its one-week low of 55.97 against the dollar. Incidentally, India VIX, which measures the cost of protection against losses in the Nifty, rose 10.5% to 18.66, the steepest gain since May 23.

With Spain on the brink of bankruptcy, the yield on Spain’s 10-year bonds reached a new euro-era high of 7.56%, with its benchmark index shedding more than 5%. According to the Bank of Spain, the country’s economy contracted by 0.4% in the three months to the end of June, having shrunk by 0.3% in the previous quarter.

German vice-chancellor Philipp Roesler on Sunday expressed the inability of EU leaders to rescue Greece. Roesler said he is ?very skeptical? about Greece’s existence in the euro zone, causing US Treasuries to decline to record lows, euro weakening to its lowest level in two years. Crude oil prices fell for the fourth successive session.

?Today’s selloff was broadly caused by renewed concerns in the euro zone. Once again, Greece is back in the middle of European crisis and the fears are likely to spread to France and Italy. On home turf too, the government is likely to face opposition on its FDI-in-retail bill,? said a Mumbai-based analyst.

In India, metal stocks were the biggest losers of the day, followed by real estate, power and automobile stocks. The BSE Metal index fell 3.35%, whereas the NSE CNX Metal index ended down 3.31%. Maruti Suzuki plunged 5.65% as the country’s largest car manufacturer announced locking out of Manesar plant. Sterlite Industries and Hindalco Industries fell 5.19% and 4.67%, respectively.

Capital goods major Bharat Heavy Electricals ended down over 3%. L&T ended down 1.12%, as the company disappointed the investors with its ebitda falling 280 basis points to 9.1% during Q1FY13. The stock fell over 3% in early trade despite a higher-than-expected 16% growth in Q1 net profit of R865 crore.

Overseas investors net bought Indian shares for a 14th day on July 19, the longest run of net purchases since February, data from the Securities & Exchange Board of India show. Foreign funds have invested a net $10.2 billion in local equities since the start of 2012.

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First published on: 24-07-2012 at 03:16 IST
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