Sensex plunges 901 pts on US recession fears

After a sluggish performance in the week leading up to the Budget, the Sensex was back to its old ways on Monday.

The index dropped 901 points - its biggest loss in five weeks - to close at 16,678 and investors saw their wealth eroded by Rs 2.69 lakh crore in just about five hours. The Nifty, too, shed 271 points to close below the psychologically significant 5000-level at 4,953.

With the indices on Wall Street dropping sharply on Friday, analysts said they had pretty much expected the Indian markets to follow suit when they opened for trading on Monday.

The US markets were hammered on Friday after another round of weak economic data was reported. It fuelled fears of a recession in the US. Not just that, insurance giant AIG posted a record $5.29 billion loss for the last quarter. That added to the nervousness and saw Asian markets open between 1-4% lower on Monday. But the Sensex was the biggest loser after dropping a little over 5%, its second-largest fall in a day.

"The 901-point drop was largely on account of global market movements. The Budget was not a major factor in the day's slide," said Rashesh Shah, MD, Edelweiss Capital.

News Source : Samachar