Sunday, Dec 04, 2022
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Another Ice Meltdown

Another Ice Meltdown

The e-glut has claimed its victims. Now, after the shakeout only the serious players are left standing.

The higher they rise, the harder they fall? In late March, the legendary Mark Mobius, chief of Templeton Emerging Markets, declared that US stockmarkets were ripe for a massive crash. Oops. The seemingly never-to-end rise of the Nasdaq index, the tech-heavy US stockmarket, where most software and all dotcom companies are listed, halted. A slow fall began. Then, on Friday, April 14, the US Labour Department announced that inflation was on the way up, ending its five-year hibernation. To investors, that meant short-term interest rates may be pushed beyond the expected quarter-point hike. Waves of selling immediately swamped US stocks. The three major Wall Street indices - Dow Jones, Nasdaq Composite and Standard & Poor’s 500 - logged their biggest one-day point declines in history. The Dow lost a record 617.78 points, or 5.66 per cent. The Nasdaq Composite was driven down 9.67 per cent. When Black Friday ended, the Composite had lost 1126 points in a week and was 34 per cent down from its March 10 high of 5048.

Indian bourses followed suit. Between April 11 and April 20, the bse Sensex fell by a stomach-turning 16 per cent, from 5541.54 to 4657.42. The mayhem started in the tech stocks, but soon spread to companies across the board as hundreds of scrips hit the lower circuit filter every day, that is, their prices fell so much that trading in these shares was stopped by the exchanges. Market darling Infosys announced its annual results: net profits up by 115 per cent, and its stock price was hammered down 26 per cent in the next seven days. Blue chip software maker Satyam Computer Services declared net profits as 69 per cent higher than last year, and its price slid 18 per cent. ice (infotech-communication-entertainment) stocks, seemingly invulnerable even a month ago, were suddenly in the trash can.

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