Bulls slip on 'Greece' and oil

Mumbai: A deadly cocktail of rapidly dwindling global crude oil prices as Saudi Arabia takes on the United States in the world oil arena and looming polls in crisis-ridden Greece, that might see its exit from the Euro region, saw the Sensex and Nifty plunge with a ferocity Tuesday that took marketmen by surprise. Investors saw their combined wealth eroded by Rs 2.75 lakh crore after both the Sensex and the Nifty posted their biggest single day loss since September 2013. After opening the day down with a huge 250 points  gap, the 30-share Sensex tanked 854.86 points or 3.07 per cent to close  at 26,987.46, breaching the 27,000 comfort zone.

The 50-share Nifty plunged 251.05 points or 3 per cent to close at 8,127.35. It was a domino effect that started on Monday night when the US markets closed in the red, leading to the fall in the Asian markets followed by the Indian and European markets seeing huge panic selling. “When the entire global markets are falling, India can’t stand out from the rest. It has to fall,” said Andrew Holland, CEO, Ambit Investment Advisors.

On Tuesday, markets across the Asia-Pacific region closed deep in the red. While the Japanese Nikkei 225 slumped 3.02 per cent, its largest fall in the last 10 months, South Korea’s Kospi dropped 1.74 per cent to close at a one and a half year low. The fall in global crude oil prices is good for India. However, lower oil prices could hurt the economic growth of oil producing countries, which is likely to further slow down the global growth recovery.

“The fall in the global crude oil and commodity prices is not good for a number of countries like Russia, Brazil, Venezuela, the Middle East and Africa. Global investors are worried about the global growth prospects and are taking some risk off the table,” added Mr Holland. According to the provisional data released by the stock exchanges, foreign institutional investors offloaded shares worth Rs1,570.76 on Tuesday. Global sentiments were also down on fears of a potential exit of Greece from the European Union.

“There is a strong possibility of an EU sceptic political party coming to power in Greece after this month’s national elections. Global investors fear that Greece could default on its commitment once it leaves the EU,’ pointed out Sudip Bandyopadhyay, MD and CEO, Destimoney Securities.