Global concerns, especially economic woes in the US, have started haunting the markets again. Dalal Street tumbled today as the global sell-off in equities prompted Indian investors to rush to the exit door. The BSE Sensex plunged 901 points, or 5.12 per cent, to 16,677.88, registering its second biggest single day point loss — it fell 1,408 points on January 21. It was also the Sensex’s second biggest single day fall in percentage terms. The broader CNX S&P Nifty fell 270.50 points or 5.18 per cent at 4,953.

Analysts said investors across the world reacted nervously to a steep decline on Wall Street on Friday after disappointing economic and corporate news renewed worries about a US recession. Asian markets, which opened before Indian markets, closed with heavy losses, setting the stage for a downtrend in India. Analysts said some proposals in the Union Budget added to the selling pressure.

Amitabh Chakraborty, president-equity, Religare Securities, said, “The market started on a negative note following the sharp fall in overseas market on Friday. Budget proposals have rattled many of the foreign funds and arbitrageurs. The market is clearly trying to find a bottom, and taking cues from overseas.” The market is upset with the hike in short-term capital gains tax from 10 per cent to 15 per cent, change in the tax treatment on Securities Transaction Tax (STT) and other measures like farm loan waiver.

Credit environment in the US has deteriorated significantly. Valuations in India are still relatively high. “We believe the market is trying to anticipate FY2009 earnings estimate, where risk to downgrade looms large. Fourth quarter results due in April hold the key,” Chakraborty said.

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