'Double dip' fears grip BSE, IT stocks down

BANGALORE, INDIA: Even as the fears over a second recession reigned on world stock markets, BSE Sensex touched its lowest level since June 2010 on Friday, joining a slide in Asian stocks.

Following the concerns of a “double dip” in the backdrop of the European debt crisis and the apprehensions about the U.S. slowdown, markets in London, New York and the Far East experienced big falls on Thursday, prompting investors to cut positions in risky assets.

And the fear psychosis got reflected in the Indian stock markets too, as the BSE Sensex touched its lowest level since June 2010 on Friday, joining a slide in Asian stocks.

By 11:50 a.m. IST (0620 GMT), the 30-share BSE index was down 3.2 per cent to 17,120.39 points, but had fallen to a near 14-month low of 17,208.83 at one stage. However, by 3.00 p.m., it improved a bit to 17,269.32 and closed at 17,305. 87.

"Basically, it's the global headwinds which are rubbing off, and right now there is risk aversion," said Ambareesh Baliga, chief operating officer at Way2Wealth Securities. "Export or interest rate-dependent sectors are seeing more weakness than others."

The condition was the same in the Asian markets, which tumbled after the overnight sell-off on Wall Street.

By 0453 GMT, the MSCI's measure of Asian markets other than Japan was down 4.6 per cent, while Japan's Nikkei lost 3.7 per cent.

Software stocks were among the worst hit, on worries the worsening situation in the United States and Europe — key markets for Indian software firms — could hurt growth prospects.

At the time of closing, 3 p.m. IST, Tata Consultancy Services (TCS) fell 3.66 per cent at Rs. 1,056.70, while smaller rival Infosys lost 4.35 per cent at Rs. 2,590.55. Wipro was down 2.15 per cent at Rs. 368.00.

The BSE IT index slumped over 5 per cent in the early hours to 5,330.83, compared to the previous day's closing of 5,682.06. At 3 p.m, it stood at 5450.61.

(With inputs from Reuters)