The Sensex takes a beating as bad news piles up and Yashwant Sinha’s ‘market
friendly’ Budget is all but forgotten...
Everything that goes up must come down. It’s a law of nature. But there is
no law that says it should come hurtling down, bruising everything in its path,
the way the sensex did last fortnight. In the two weeks following the Budget,
the IT sector along with everything else, had crashed at the bourses. Almost all
tech companies stood at their 52 week low (the overall figures was about one in
every five scrips) , investors had lost close to Rs 150,000 crores and the BSE
had crashed 700 points in eight trading sessions.
One hell of a reaction to what was supposed to be a ‘feel-good’ Budget.
It all started with the tech stocks. The Budget notwithstanding, the TMT
sector was taking its cues from Nasdaq which itself had fallen to below 2,000
levels following revenue warnings by most major IT companies in the US. Other
factors kicked in, including fears of a payment crisis and the panic quickly
spread to other old economy stocks. And finally, on what is now being called
Black Tuesday, the Tehelka.com controversy plunged the market into steep
volatility as the sensex swung by a record 900 points finally settling at 227
points lower than the day’s opening.
But stock indices are emotional things. By the time you read this, the
situation could have changed–for the better of for worse. Either way, it has
been a chastening experience for the IT sector. In a year-over-year comparison,
at one point last fortnight Infosys shares were down by close to 63%, Wipro was
down 75%, Satyam 84%, Aptech almost 93% and Pentamedia scrips had been shaved
off by 94%. Ozymandias would have blushed at such a fall.
Sometime last year a notional club came into being in the IT sector. It’s
called the "90 Per Cent Club". A rather derogatory term used in the
industry for dot-coms and start ups who had lost 90% of their share value on the
bourses. Looks like the 90% Club is on its way to becoming respectable