Monday, December 11, 2006

Manic Monday on India's Stock Exchange

The Bombay Stock Exchange (known there as a "bourse") dropped 2.9% today.

From the article linked above:

The 30-share Sensitive Index had tumbled by 537.76 points, the biggest intra-day fall since September 11, but gained partially toward the end but closed 2.9 per cent lower at 13,399.43.

Now the question is: will India's stock market have any effect on American markets? From what I was able to gather from the article, much of the decline was fueled by a large drop in banking stocks.

Stock brokers said RBI's decision to hike CRR of banks by 50 basis points to tighten liquidity and contain inflation, triggered the fresh round of selling, particularly in banking sector stocks by foreign funds and retail investors.

I think "RBI" stands for the Royal Bank of India and CRR stands for Cash Reserve Ratio. Although the acronyms are not defined in the article.


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