24 November, 2020

Highly Inflammable

The downslide has investors in a tizzy. But there may still be a silver lining to it.

Highly Inflammable
Just six months ago, investors across India were ecstatic as the bse Sensex seemed well set to kiss the magical 25000 level. But June 2008 will go down India's capital market history with rather different numbers. Not only has the Sensex hit a 15-month low, it has also been the biggest losing month in a decade.

The index's downslide has not happened overnight. The Sensex has been falling consistently over the last few weeks, shaving off a significant amount of investors' wealth. In the last six weeks, the Sensex has gone down 21 per cent from its May 2008 level, when it was perched well above 17000.

Most of this slide, say analysts, has been because of the spiralling prices of crude, though India's double-digit inflation and resultant price rise have also contributed to it. Says Sanjay Aggarwal, head of financial services, KPMG: "The fundamental cause of this is the lack of stability in oil prices. Compared to the demand, the increase in prices has been disproportionate." On July 3, oil prices crossed the $145 per barrel mark. As...


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