The worst financial crisis in over 80 years, sparked by the meltdown of the US sub-prime mortgage market, made 2008 one of the worst ever years for investors.
Stocks fell across the board, accompanied amid a high degree of volatility
The global financial crisis that began last year with the collapse of the US housing market spread around the world, bringing several top financial institutions to their knees and pushing the United States, Japan and Europe into recession or to the brink of it.
There were many instances when market slumped following bad news from the global markets. Then again, there were many sessions when positive global sentiments lifted the market for a short while.
The barometer index lost 10639.68 points or 52.44% in the calendar year 2008 from its close of 20,286.99 on 31 December 2007, on global financial crisis. It is 11559.46 points or 54.50% below its all-time high of 21,206.77 struck on 10 January 2008. Nifty lost 3179.45 points or 51.79% in 2008.
The year 2008 started on a firm note with the economy growing at well above 8% and the Sensex touching a staggering 21,000 points in earlate January. At that time, inflation was the only worry as global crude prices were nearing the $100 mark. The Sensex hit an all time high of 21206.77 on 10 January 2008. On that day, the index had closed at 20582.08.
However, the market underwent a dramatic change after a bearish phase started in late January 2008. The first blow came on 21 January 2008 when the BSE Sensex registered its biggest single-day point fall. The market cracked following a sharp setback in global markets, selling by foreign institutional investors and on margin calls. The 30-share BSE Sensex declined 1,408.35 point or 7.41% to 17,605.35. The broader CNX S&P Nifty declined 496.50 or 8.70% to 5,208.80.
The biggest shock to investors was on 11 February 2008 when India's biggest public offer from Anil Ambani group company Reliance Power slipped on the day of debut.
The issue, which generated demand of Rs 7,50,000 crore, settled at Rs 372.50 on BSE, a discount of 17.22% over IPO price of Rs 450. It debuted at Rs 547.80, a premium of Rs 21.73% from the IPO price.
Volumes in the stock were high. On BSE, 6.38 crore shares changed hands in the counter. Those who had invested in the Reliance Power IPO had incurred a loss of Rs 77.50 per share. Retail investors who had got a discount of Rs 20 per share, had suffered a loss of Rs 57.50 per share.
A panic selling was witnessed in ICICI Bank on rumours that the country's largest private sector lender in terms of market capitalisation was going bust. The scrip, which peaked at over Rs 1400 a share in January 2008, slumped to Rs 282.15 on 27 October 2008.
The bank had even filed a police complaint in Coimbatore and Mumbai on 12 October 2008 against a bear cartel of certain high-profile BSE brokers, who, according to the bank, were actively selling the bank's shares for quite sometime, and may have been responsible for spreading the rumours.
After their record investments in a single year in 2007, FIIs pulled out as much Rs 52987.10 crore till 30 December 2008, as against an inflow of a huge Rs 71486.50 crore in the corresponding period last year.
Just when the year came to an end, a shocking move by Satyam Computer Service raised doubt about country's corporate governance system. Shares of Satyam, India's fourth biggest IT firm by sales, slumped 30.22% on 17 December 2008 after investors chucked the stock following the company's announcement after market hours on 16 December 2008 of a $1.6 billion deal to acquire Maytas Properties and Maytas Infrastructure, companies run by chairman B Ramalinga Raju's sons B Rama Raju and Teja Raju. Satyam scrapped the acquisition of companies connected to its chairman after the plan angered investors.
source: Capital Market
