THE FLOOR GIVES WAY MARKET TANKS 1071 PT

HINDALCO, UNITECH, SUZLON, IDFC SHARES FALL BELOW Rs 50

The Sensex and Nifty fell 11-12% on Friday, the third-largest single-day fall in percentage terms

 THERE'S an eerieness about October 24 — something that the children of the bull market can never sense. The crash of 1929 began on that day and eventually led to the Great Depression. Almost 79 years later, the world is haunted by a similar spectre. Blows from stock losses are slowly giving way to a strange fear of job losses. The drop in markets across continents simply mirrors these concerns. However, with booms getting longer and busts shorter in the past few decades, today's investors and businesses are hoping that they would be a lot more lucky. But a string of bad news continues to smother such hopes.
    The UK is well into recession, Russia has been downgraded, some of the Latin American economies, including Argentina, are on the brink of default, Asian miracle South Korea is busy defending its currency and the economies of eastern and central Europe are in a shambles. Banks and institutions with high exposures to these markets are scrambling to offload these securities, sparking tremors which are being felt in distant Dalal Street. The Sensex and Nifty fell 11-12% on Friday — the third-largest single-day fall in percentage terms — as signs of pain in the real economy become evident. The talk is no longer just about slowing corporate earnings; in fact, the biggest fear now is corporate defaults, which will then hit the banks which have lent to companies.
    The bull market from 2003 till early 2008 was unprecedented, and indications so far are that the ongoing bear phase too promises to be one. The pain could be prolonged: with the rupee touching 50 against the dollar, companies with foreign currency loans, FCCB oustandings and synthetic derivatives contracts that have converted expensive rupee loans into dollar and yen liabilities will be in for a shock.
    The 30-share Sensex hit a 35-month low of 8,566.82, before crawling higher to 8,701.07 at close, a decline of 1,070.63 points over its previous close. The 50-share Nifty fell 359.15 points or 12% to close at 2584. Foreign institutional investors continued to exit India in a tearing hurry, offloading Rs 1,432 crore worth of shares at the net level. Amid the outflow, the RBI is selling $500 million-$1 billion every day to defend the rupee — a move that will pose a monetary policy challenge as liquidity gets squeezed.
    It's cold comfort that even after the downgrades in GDP growth, India will still be among the fastest growing economies in the world. With Friday's fall, benchmark indices are off 60% from their peaks seen 10 months ago. India was the worst performer in Asia on Friday. Among the other prominent losers, Japan, Hong Kong and South Korea were down 8-10%.
    Trading in futures on the Standard & Poor's 500 Index and the Dow Jones Industrial Average was limited to prevent contracts from further declines after drops of more than 6%. European equities, too, took a pounding with key markets down 8-11%. Yen at 13-yr high against dollar
    PRICESof crude oil, copper and gold fell sharply on persistent concerns of a slowdown in the global economy. Crude prices slumped even as the Organisation of Petroleum Exporting Countries announced a production cut. The yen climbed to a 13-year high against the dollar, as investors continued to pare their carry trades — a process of borrowing in yen and deploying the money in high-yield securities, often in emerging market equities.