Japan Tsunami smashes markets worldwide

Massive earthquake in Japan, which triggered tsunamis (crest of waves), rattled the global markets, including that of India, on Friday. Domestic bellwether Bombay Stock Exchange (BSE) Sensex slid by 0.84 per cent despite betterthan- expected industrial growth figures for January.

Possible unrest in Saudi Arabia, the largest exporter of oil, and spiralling inflation in China, stoking policy rate hike fears in that country, added to the woes of world markets, and hammered global commodity prices. Also, the debt concerns of Portugal revived by evening, before the US markets opened.

Sensex opened on a negative note but bounced back to scale the previous close within a couple of hours, taking a cue from the better- than expected index of industrial production ( IIP) figures. However, the trend was short- lived as the Japanese calamity took its toll on the market, dragging the index down by 154 points to 18,174 points towards close. On the National Stock Exchange (NSE), the broad- based Nifty slid by 49 points or 0.89 per cent to 5445.45 points.

Early in the day, Asian shares dipped, owing to the spreading unrest in the Middle East and later on fears of rising inflation in China. In the latter part of the Indian session, European markets opened lower as the news of Japan’s earthquake trickled in. In general, fears about the economy and unrest in Saudi Arabia upset the outlook for equities.

“ News from around the globe has been a big worry for the markets, worsening the sentiments day by day. This has fuelled worries over the growth of economy as well,” said Gaurav Dua, research head of Sharekhan.

Rising global economic concerns have hit the commodity prices the most. Oil price, which were spiralling on geo- political concerns in Libya, Bahrain, and now in Saudi Arabia, softened over 2.5 per cent to $ 100 per barrel in New York by Friday evening ( Indian time).

Among sectoral indices on BSE, only oil and gas and FMCG ( fast moving consumer goods) indices bucked the trend, while all the remaining 11 indices ended in red. Metals was the highest loser, followed by outsourcers, on expectation of a fall in demand in line with sliding global growth prospects. Banking stocks tumbled on fears of a policy rate hike next week.

Avinash Gupta, vice- president, (research equity) of Bonanza Portfolio, said, “ Short covering in last one- and- half hour of trade led Nifty to close above its day’s low. The number of declines was more than thrice that of advances.” Though industrial growth figure for January, at 3.7 per cent, is the best in three months, and would have given some fillip on the growth front in normal circumstances, this may not be enough to turn the global bad news around and boost the markets.

The Nifty has been trading in a range between 5,600 and 5,250 for the last couple of weeks with resistance around the 200-day moving average (DMA) at 5,600. Dua of Sharekhan feels that the near-term market outlook is downwards, based on technicals.

“ The market is expected to consolidate in a range of 5200 to 5,650. Market is likely to be volatile as monthly wholesale price index (WPI) inflation data for February is due on Monday,” Gupta said.