After global credit squeeze fears, it’s now the turn of political uncertainties to pull down the markets. The benchmark Sensex plunged by over three per cent on concerns arising from the fluid political situation in New Delhi and the increasing prospects of a mid-term general election.

Though many other Asian markets including Japan, Hong Kong and South Korea advanced, Indian stocks — which normally follow the global trend — reeled under sustained selling as political concerns started dampening the sentiment. The market is between the devil and the deep sea. On the one side, the market is yet to come out of global liquidity fears while on the other, political concerns are wreaking havoc with sentiment.

The BSE Sensex lost 438 points to close at a three-month low of 13,989.11. The benchmark index, which recovered around 280 points on Monday, has lost 1,879 points (13.43 per cent) from its all-time high of 15,868.85 struck on July 24, 2007. Investors’ wealth — or market capitalisation — fell by Rs 131,000 crore to Rs 41.69 lakh crore today.

“Marketmen are worried about the tough stand of the Left parties on freezing the forthcoming negotiations on India-specific safeguards at the International Atomic Energy Agency (IAEA). The Left parties have warned the government of withdrawing the support if it pursues with a nuclear deal with the US. As the Left parties have 60 MPs in the 545-member Lok sabha,, the government may fall or be reduced to a minority if the Left withdraws support. The market may go down further till some clarity emerges on the political front. At the same time, global worries are surely affecting sentiments here,” said Ficuswealth director Vinod Bansal.

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