MP Rana, Saturday 06th August 2011 
In the midst of prevailing fears over global economic downturn due to the sharp budget deficit in U.S. and Euro zone debt crisis, Indian stock markets showed a steep slump on Friday.
The BSE (Bombay Stock Exchange) recorded lowest since June 2011, falling by 2.2 percent to 17,305.87 points. Similarly, the S&P CNX Nifty Index, coming down to the tune of 2.3 percent, fell to a low of 5211.25 points, Reliance Industries Ltd., the company with biggest market cap in the Indian stock indices, came down to a record low since April 2009.
The Indian Rupee, which showed the greatest strength last week at a high of Rs.43.855 per dollar, fell on friday, to Rs.44.735 for a dollar, the lowest since last five weeks.
Panicked by fears of a double dip recession in U.S. and an expectation of increase in default rate on sovereign debts by Europe, global investors aggressively sold shares on a massive scale leading to a fall in global stock indices.
According to Subir Gokarn, Deputy Governor of RBI, there were no expectations of slowdown until recently, rather the policy makers were concerned about the ‘lower than anticipated’ rate of recovery. He also added that the policy reviews in near future would also emphasize over the expected slowdown apart from concentrating on the persisting problem of inflation.
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