Sensex falls 529 points to 18-month low

Mumbai, October 3 : After keeping away for two days, bears were back in action on Dalal Street with benchmark indices snapping the rally on weak global cues.

Though the US Senate okayed the $700-billion financial bailout package and the nuclear deal yesterday, the 30-share BSE Sensex lost 529 points to end at 12,526.32, its lowest close since April 2, 2007.

Index heavyweight Reliance Industries (RIL) hit a 52-week low, falling more than 7.5 per cent. With metal prices tumbling across the globe, Tata Steel fell more than 10 per cent while Sterlite Industries plunged more than 8.5 per cent.

Concerns about the effectiveness of the US bailout plan in averting a recession in the global recession weighed on investor sentiments. The US Senate on Wednesday passed the government's financial rescue plan. On the same day, the Senate also approved the Indo-US nuclear deal. "But this failed to remove the nervousness among the investors who new fear the bailout won't have any impact on the financial sector woes," said an analyst.

US approval of a historic nuclear trade deal with India that could unleash billions of dollars of investment triggered some buying in power sector-related stocks early in the day, but they could not sustain the momentum amid the broad sell-off.

Said Alex Mathew, head of research at Geojit Securities, "The major reason for the fall was Reliance. The stock has fallen below its yearly low price of Rs 1,765. Metal stocks witnessed higher level sell-off due to world commodity market turmoil. Tata steel, Sail, Sterlite and Nalco fell substantially. The BSE metal index was down 11.5 per cent during the weak. These stocks may face more sell off in coming days due to weakness in commodity markets."

Across the globe, after stocks, the metal market is witnessing turmoil. While copper hit a 20-month low on recession and demand fears, aluminium touched a 32-month low on falling car sales. Copper prices were down around 15 per cent so far this week, eclipsing the previous record weekly loss of 13.2 per cent in August 1980, after a series of dismal US data pointed to economic slowdown in the US.

"We estimate that aluminium and zinc are currently trading between 10 per cent and 30 per cent below their marginal cost of production," said Deutsche Bank in a report.

The global wipe-out

$10.5 trillion The money lost by stock market investors across the world this year so far

$4.1 trillion Global equity...

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