CSE Index sheds a record 8.98%

Political uncertainty coupled with the absence of buying support and increased selling from foreign institutional investors and local operators pushed the benchmark CSE-40 index down by 8.98 per cent at Calcutta Stock Exchange on Monday.

Statements by Left parties giving the impression that economic reforms would be hampered was primarily responsible for the record decline in values, brokers said.

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Bear operators took advantage of the situation that there was effectively no government at the Centre and indulged in brisk selling from the very beginning forcing authorities at major bourses of Bombay Stock Exchange, National Stock Exchange and CSE to stop trading first by one hour to prevent any major default in the system.

However, the trend could not be reversed when trading restarted after the break as leading public sector undertakings and bank counters along with other heavyweights continued to meet with brisk selling leading to another sharp decline forcing another halt for two hours.

In these two hours, the Union finance ministry is believed to have instructed major financial institutions – like the Life Insurance Corporation and Unit Trust of India -- to provide support to the market and as such when trading began for the third time during the day there was sharp improvement in values.

The recovery, however, proved too little too late as the benchmark index settled with a loss of 271.12 points or 8.98 per cent, the second steepest decline after the stocks scam in 1992, at 2748.29 over the previous closing of 3019.41.