Sensex crashes over 600 points in opening trade

16 August 2007

Amidst fears of a global credit squeeze hurting the rise of Indian stocks, the 30-share sensitive benchmark Bombay Stock Exchange Sensex lost 643.64 points (around 4 per cent) on today's morning trades, touching a low of14,357.27, from Tuesday's close of 15,000.91.

The broader S&P CNX Nifty of National Stock Exchange (NSE) also fell by 199.05 points to a low of 4,171.15 from previous close of 4,370.20.

Fears of a global tightening of credit affecting Indian markets brought the banking index down 5.4 per cent, with index banking stocks led by ICICI Bank losing 6 per cent and State Bank of India declining 5.3 per cent, ranking among the major losers.

Overseas fund flows of over $9.5 billion dollars in to stocks have fuelled a major rally. Though Asian banks have relatively little direct exposure to the problems in risky US securities backed by subprime mortgages, foreign funds, reeling from heavy losses in this high-stakes form of investment, have been unloading shares to raise badly needed funds.

Keeping pace with global sentiments, investors resorted to panic sales despite an advisory statement from international rating agency Standard & Poors that problems with subprime mortgage in the US would not result in a crisis in the financial markets.