Indian markets plummet: Sensex loses 826 points, Nifty down 246

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Thursday, May 18, 2006

Bombay Stock Exchange

The Bombay Stock Exchange Senstitive Index (Sensex) crashed 826 points and the National Stock Exchange's index (Nifty) 246 in what was the largest ever intra-day drop in the their histories. At the end of day's trade, the Sensex closed at 11,391 and the Nifty at 3,388. The market breadth is also negative - 2081 shares have declined, with only 336 stocks advancing.

Analysts speculated that the reason for this drop was that the U.S. CPI number, which was released yesterday, was above expectations. This, coupled with weaknesses observed in the London Metal Exchange, has led to losses in emerging markets like India, Mexico, and Brazil.

Asian Regional Strategist at JPMorgan Chase, Adrian Mowat, believes that the Sensex will stabilise at around the 11,000 mark after correcting by around 5-6%. Indian Finance Minister P. Chidambaram dismissed the issue and described it as a routine fluctuation. The main losers in today's crash were the steel and cement segments.

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