Sensex in a sub-prime mode

Aug. 10: The Sensex fell on the domino effect with the Asian markets taking heavy losses on Friday with the Hang Seng losing 646.65 points and the Nikkei 406.51 points. The Sensex fared better in comparison as it has already witnessed a lot of blood letting on Thursday. The Sensex was hit by the tremors of the European markets that dived on news of BNP Paribas freezing three funds. The Sensex lost heavily in the first part of the trading day on Friday, going down nearly 500 points but recovering some of the losses to close at 14,868.25 down 231.90 points.
The recovery came primarily due to bargain hunting by bravehearts who ventured to buy in the uncertain market. The Nifty closed 69.85 points down at 4333.95 on value buying in technology shares in the last hour of trade. Operators also scampered to cover their short positions to avoid being tripped by the bears. On the NSE there were 318 stocks that ended positive and 815 in the red.
The total volumes traded on the National Stock Exchange and the Bombay Stock Exchange was Rs 65,344 crores of which the F&O sector accounted for Rs 48,868 crores. Though Mr M. Damodaran, chief of Sebi, has said that the US sub-prime chaos is not alone responsible for the hugely negative sentiments in the Indian market, analysts still do not know whether any of the hedge funds and private equity funds invested in India are involved directly or indirectly in the fall out of the sub-prime quake. Developments in the yen carry trade (taking advantage of low Japanese interest rates) could also impact Japanese funds in India. Mr Ambarish Baliga, vice-resident, research, Karvy Stock Broking, said that "the quantum of the damage due to problems in the US sub-prime market is still unclear."