• January 23, 2008: NRIs emerge wise investors in stock market chaos

Turmoil in Stock market- Gulf NRIs got shockwaves who invest in UAE and also in India

Mumbay, January 23, 2008
Satosh Suri/ Gary Singh, LA

On Wednesday, the Bombay Stock Exchange snapped a seven-day losing streak and added 864 points the third biggest gain in a single day, thanks to a surprise rate cut by the U.S. Federal Reserve. The Sensex had lost 4097.51 points or 19.67 per cent in the last seven days

In the last seven trading sessions, India’s top ten promoters, including Mukesh Ambani, Tatas, Anil Ambani, KP Singh (of DLF), Anil Agarwal (Sterlite Group) and Chandras’ (Unitech), have together lost over $68 billion in the market crash. In percentage terms, the decline in their net worth is close to 25%.

• Anil Ambani, whose net worth is down by about $15 billion, or nearly a third from its peak of $47 billion reached on January 11, 2008
• Mukesh Ambani, whose wealth has decreased by $14.2 billion.
• KP Singh family comes third, thanks to the decline in DLF’s stock price, with a loss of $12 billion.

Share prices rebounded 5.17 per cent, snapping seven days of losses, after the U.S. Fed slashed its leading interest rate by 75 basis points.

Reliance, SBI, BHEL, Grasim, REL and TCS were the major gainers. Twenty-nine of 30 index-based stocks closed in the black.

The Sensex has now slumped more than 20 per cent from its closing peak on January 8, joining benchmarks in Asia and Europe in a bear market and extending a global sell-off that has wiped off more than $5 trillion from stock markets this year.

The rupee's strong appreciation and the virtual drying up of interest rate and foreign exchange arbitrage opportunities and steep fall in real interest rates have driven many of them to seek fortunes in stock market-related investments.

Investors based outside India bought $17.2 billion of Indian shares last year as soaring economic growth lured funds, sending the Sensex to fresh records.

P Krishnamurthy, chief executive of Financial Services Division of Al Rostamani Group said, "The global link to the market crash is obvious. But the immediate reason for the decline was unwinding of derivatives positions as the market opened."

While the unprecedented growth in stock markets delivered strong appreciation on investments, many middle class salary earners too started investing in Indian stocks directly and through mutual funds.

Shaikh Sultan Bin Saud Al Qasimi, Chairman of Barjeel Geojit Securities, the financial services company that caters to a large number of Indian investors said, "The Indian stocks are supported by a strong growth story."

"The economy is growing at around 10 per cent per annum. A market correction can't wipe up out the huge potential of the economy backed by strong corporate performance. What we are seeing is a knee-jerk reaction to the global market instability."

Most of the Bankers said, "The Indian growth story can withstand the current turmoil, a correction was widely expected due to the over exuberance and the current situation is largely the result of global market corrections that has prompted the many institutional investors and hedge funds to sell off."

Asian investors taking a swift lunch break at their local brokerage yesterday shrugged off huge stock market losses and dug in for the long haul.

In Tokyo, the Nikkei fell 5.65 percent to its lowest level for more than two years. One investor said, “This is a problem that started in the US, and as the saying goes, if America sneezes, Japan catches pneumonia and in the long term Japan’s economic outlook will not be affected.”

Tourists pose with a bronze sculpture of a bull, the symbol used by Wall Street for positive times in the market, as the value of stocks fell in early trading on the New York Stock Exchange due to fears of recession, in New York yesterday. (REUTERS)