DAWN Group- The sub-prime mortgage loan crisis in the US, which has led to a global meltdown of stock indices, has had a devastating impact on the Indian capital market. But the Indian rupee,which has been gaining strength, has finally started heading southwards, bringing cheer to exporters.
The impact of the American credit crisis was first felt on the bourses late last month, when global investors began pulling out funds from the market. Since then, the total market capitalisation onIndian stock markets has plummeted by a whopping Rs3.3 trillion (about $80 billion), tumbling to Rs42.75 trillion from over Rs46 trillion over the past three weeks.
The Sensex, the benchmark index on the Bombay Stock Exchange, tumbled by nearly 650 points on Thursday, the second biggest one-day fall in terms of absolute value. Virtually all the blue-chips on theSensex have seen sharp erosion in values in recent weeks, dragged down by the sub-prime loans crisis in the US.
Worse, while domestic bulls were hopeful a few days ago of salvaging the situation, it appears that the pullout of foreign funds from the markets is likely to accelerate over the coming weeks,dampening overall sentiments. They have already pulled out nearly $750 million in August, and signs are hundreds of millions of dollars will be sucked out of the markets in the coming days.
