Indian stock rout stuns, angers investors
Reuters, 05.17.04, 7:04 AM ET
BOMBAY, May 17 (Reuters) - A record plunge in Indian stock markets on Monday left investors stunned and sent brokers to the streets to protest against Sonia Gandhi's Congress party, which is set to form a new government with communist support.
"There is blood on the street. People are just queueing up to sell," said Arun Kejriwal, director at research firm KRIS.
"There is absolutely no volume to justify this kind of fall. It is a scam now. We will start hearing of bankruptcies soon."
India's key share index plummeted as much as 15 percent as foreign funds stampeded for the exit, adding to last week's heavy losses and leaving investors shell-shocked.
While the market's plunge triggered a few trading suspensions in the morning, a few hundred brokers and investors gathered for an impromptu protest on Bombay's Wall Street, Dalal Street, shouting "Sonia Gandhi, hai, hai (Down with Sonia Gandhi)."
Dozens of armed policemen surrounded the towering Bombay Stock Exchange building, which was shuttered and cordoned off during the trading suspension.
"This is the worst day in our lives -- we've lost everything, we're dead," said Sandeep Sirsalewalla, a broker. "We want the BJP (Bharatiya Janata Party) back."
The Congress and its allies are set to form a government after a surprise win over the pro-reform ruling Bharatiya Janata Party-led (BJP) coalition last week, sparking a sell-off by foreign investors fearful about the future of economic reforms.
Apprehension turned to panic on Monday on news the communists would support, but not join, the government. Investors felt this may allow the leftists, free of the responsibility of governance, to scuttle policies such as privatisation that have helped attract foreign funds to the country.
The communists stoked further panic by saying subsidies should be increased and the privatisation ministry be scrapped.
"The left parties should not have made such statements before the formation of the new government. It has totally demoralised the market," said Sudip Kothari, a businessman.
"I don't know how much money I've lost, but I've never seen such a huge crash, not even after the (1993) Bombay bomb blasts."
Ajit Surana, managing director of Indian brokerage Dimensional Securities, described the selling as a stampede.
"Worse, there is no government in place which can do something. There is a vacuum."
The market partly rebounded from the 15 percent fall, but that did not lift the gloom.
"All faith in the market has been lost due to this fall," said Ambareesh Baliga, vice president of Karvy Stock Broking. "Even if it recovers, I don't think the market will go near previous levels."
But a few investors held a less pessimistic view.
"If communism were such a problem, then China should be a tapering economy, not the giant it is," said Rahul Choudhary, CEO of Tata Power Broadband Co Ltd.
"The long-term economic fundamentals seem to be very good."
(With reporting by Maria Abraham, Denny Thomas, Jayashree Lengade, Rosemary Arackaparambil and Rina Chandran) Copyright 2004, Reuters News Service
http://www.forbes.com/home/newswire/2004/05/17/rtr1373631.html
Reuters, 05.17.04, 7:04 AM ET
BOMBAY, May 17 (Reuters) - A record plunge in Indian stock markets on Monday left investors stunned and sent brokers to the streets to protest against Sonia Gandhi's Congress party, which is set to form a new government with communist support.
"There is blood on the street. People are just queueing up to sell," said Arun Kejriwal, director at research firm KRIS.
"There is absolutely no volume to justify this kind of fall. It is a scam now. We will start hearing of bankruptcies soon."
India's key share index plummeted as much as 15 percent as foreign funds stampeded for the exit, adding to last week's heavy losses and leaving investors shell-shocked.
While the market's plunge triggered a few trading suspensions in the morning, a few hundred brokers and investors gathered for an impromptu protest on Bombay's Wall Street, Dalal Street, shouting "Sonia Gandhi, hai, hai (Down with Sonia Gandhi)."
Dozens of armed policemen surrounded the towering Bombay Stock Exchange building, which was shuttered and cordoned off during the trading suspension.
"This is the worst day in our lives -- we've lost everything, we're dead," said Sandeep Sirsalewalla, a broker. "We want the BJP (Bharatiya Janata Party) back."
The Congress and its allies are set to form a government after a surprise win over the pro-reform ruling Bharatiya Janata Party-led (BJP) coalition last week, sparking a sell-off by foreign investors fearful about the future of economic reforms.
Apprehension turned to panic on Monday on news the communists would support, but not join, the government. Investors felt this may allow the leftists, free of the responsibility of governance, to scuttle policies such as privatisation that have helped attract foreign funds to the country.
The communists stoked further panic by saying subsidies should be increased and the privatisation ministry be scrapped.
"The left parties should not have made such statements before the formation of the new government. It has totally demoralised the market," said Sudip Kothari, a businessman.
"I don't know how much money I've lost, but I've never seen such a huge crash, not even after the (1993) Bombay bomb blasts."
Ajit Surana, managing director of Indian brokerage Dimensional Securities, described the selling as a stampede.
"Worse, there is no government in place which can do something. There is a vacuum."
The market partly rebounded from the 15 percent fall, but that did not lift the gloom.
"All faith in the market has been lost due to this fall," said Ambareesh Baliga, vice president of Karvy Stock Broking. "Even if it recovers, I don't think the market will go near previous levels."
But a few investors held a less pessimistic view.
"If communism were such a problem, then China should be a tapering economy, not the giant it is," said Rahul Choudhary, CEO of Tata Power Broadband Co Ltd.
"The long-term economic fundamentals seem to be very good."
(With reporting by Maria Abraham, Denny Thomas, Jayashree Lengade, Rosemary Arackaparambil and Rina Chandran) Copyright 2004, Reuters News Service
http://www.forbes.com/home/newswire/2004/05/17/rtr1373631.html
