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[huma]

MUMBAI: Jitters in the European Union countries unnerved investors around the globe and those on Dalal Street. On Friday, following the previous night's sell-off in the US market, the BSE sensex opened flat but heavy selling through the day pulled it down by 434 points to its three-month closing low at 15,791. At the end of the day's session, investors were poorer by Rs 1.7 lakh crore with BSE's market capitalisation now at Rs 57.5 lakh crore. The day's slide was led by sectors real estate and metals, while FMCG stocks were the least affected.

The bad news for Indian investors is that the US market opened weak on Friday and the local markets are open on Saturday for a two-hour special trading session to test new additions to NSE's trading software. Market players expect selling to continue on Saturday in case Wall Street does not show signs of stability at Friday's close. In early trade, the Dow Jones was trading below the psychologically important 10K mark for the second day in a row.
While it is confirmed that the governments in Greece, Spain and Portugal are finding it difficult to service debts, market players fear about the contagion effect. The question in everyone's mind is what if UK, and then US, face uphill task because of rising debts.

‘‘Over the next few days institutional investors will question the ability of UK and the US to maintain their triple-A ratings,'' said Gautam Chand, CEO, Instanex. In case the ratings of even one of these two countries is cut, there would be fresh rush for flight to safety by global institutional investors, which means selling in countries like India where they have made good profits last several months.