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22 Sep 2011 07:00 PM
Sensex and Nifty witness sharp crash. What should you do? 
A Staff Writer
 

Sensex saw its biggest one-day slide in 26 months. However, experts suggest investors to maintain their investments in equities.

Today, the domestic markets witnessed a sharp crash with the Sensex and the Nifty closing at 16,361 and 4,924, down 704 and 210 points respectively, following Federal Reserve’s assessment that the US economy faces significant downside risks. Also, data showing further slowdown in China’s manufacturing sector and fears of worsening European sovereign-debt woes unnerved the global markets including Indian markets. The selloff was further aggravated by the weak opening of the European markets.

At the end of the day, BSE Realty, down 5.67%, was the worst hit on worries of higher interest rates that would dent demand for residential and commercial properties followed by BSE Metal, down 4.34%, on weak economic data in China, the world’s largest consumer of aluminum and copper. BSE Oil & Gas slumped 4.19% while BSE IT declined 4% on worries of economic slowdown in US and Europe as over 80% of the revenue is generated in these markets.

 According to S Naren, CIO – Equities, ICICI Prudential Mutual Fund, “Indian markets will get attractive if crude oil corrects.” He suggested that investors should maintain their investments in equities when the markets correct and when oil price corrects, they should increase their investments in equities. Speaking on investments in debt, Naren says investors should continue investing in short term debt until oil price corrects.      

Moreover, the weakening of rupee which makes import of goods especially crude oil expensive worsened the market sentiments. As per reports, RBI was suspected to be selling dollars in the foreign exchange market at around Rs 49.15 to arrest steep losses following grim global economic outlook which forced investors to shun equities and move into safer assets like debt.

 
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