Alleging that “malpractices” in the stock market has led to its crash on the past two days, the Communist Party of India on Wednesday demanded an enquiry into the collapse and sought a heavy increase in the securities transaction tax from the present levels.

“We demand an appropriate inquiry as there are reasons to believe that malpractices, aberrations and the lack of a supervisory role by SEBI has led to such a crash,” party leader Gurudas Dasgupta said.

He held Finance Minister P Chidambaram “morally responsible” along with the government’s economic policies for the crumbling on the bourses.

Party General Secretary A B Bardhan demanded a hefty increase in the securities transaction tax (applicable on purchase and sale of equities), which, he said, had been reduced to a “nominal 0.1 per cent” following “pressure” from the big players in stock exchanges.

Observing that the Indian stock market is “increasingly becoming a casino”, he said if such volatility continued, “there can be a big crisis, may be a hundred times more than the Harshad Mehta episode.”

Calling for a halt to the “senseless Sensex boom”, Bardhan said when thousands of farmers commit suicide due to the acute agrarian distress, “government does not lose its sleep. But when there is a panic in the market and Sensex falls, the Finance Minister rushes in to reassure everyone.”

The veteran Communist leader sought corrective measures to regulate and stabilise the stock market to “prevent huge accumulation of wealth by a few at the cost of pauperising the common man, looting his hard-earned savings, and demanded imposition of “heavy” transaction tax on this “profit without production”.

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The BSE benchmark index Sensex, which plunged over 2,200 points in intra-day trading, managed to regain some loss to settle at 16,729.94. Tuesday’s fall of 875.41 points from Monday’s close is the second biggest drop.

Here are the 10 biggest falls in the Indian stock market history:

Jan 21, 2008: The Sensex saw its highest ever loss of 1,408 points at the end of the session on Monday. The Sensex recovered to close at 17,605.40 after it tumbled to the day’s low of 16,963.96, on high volatility as investors panicked following weak global cues amid fears of the US recession.

Jan 22, 2008: On Tuesday when it hit a low of 15,332, down 2,273 points. It recovered losses 875 points and closed at 16,730. The Nifty closed at 4,899 at a loss of 310 points. Trading was suspended for one hour at the BSE after the benchmark Sensex crashed to a low of 15,576.30 within minutes of opening.

May 18, 2006: Loss of 826 points (6.76%) to close at 11,391, following heavy selling by FIIs, retail investors and a weakness in global markets. The Nifty crashed by 496.50 points (8.70%) points to close at 5,208.80 points.

December 17, 2007: Index plunge to a low of 19,177 - down 856 points from the day’s open. The Sensex finally ended with a huge loss of 769 points (3.8%) at 19,261. The NSE Nifty ended at 5,777, down 271 points.

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Shock rate slash by US after second day of carnage in stock markets Indian hopes ride on biggest cut in decade

America today announced the steepest interest rate cut in over 23 years, scrambling to stem a borderless stocks rout that drove down prices for the second consecutive day in India, too.

The US Federal Reserve’s shock slash — the financial equivalent of a bombing run to calm the terror in markets — did not prevent a slide on Wall Street when trading resumed after a holiday but the decline was shallower than feared.

The Federal Reserve, headed by Ben Bernanke, stunned the financial world by trimming the federal funds rate — the overnight lending rate between banks — by a hefty three-quarters of a percentage point to 3.5 per cent, its lowest level since September 2005.

The move was designed to jumpstart the US economy and halt the steep losses in global equities.

The Dow Jones industrial average was down almost 400 points at one stage but, by mid-morning in America, it had cut those losses in half and was ruling at 11913.39, down 185.91 points. European stocks staged a more robust recovery.

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The public issue of Reliance Power closed for subscription last week. However, the buzz around it is far from over. According to bankers who are associated with the deal, there have been quite a few withdrawals in the non-institutional segment, which is also popularly known as the HNI (for high net worth individual) category.

Market players said the withdrawals have been on account of two factors: the huge oversubscription and a steady decline in the grey market premium. The massive fall in the secondary market has also played a major role, they said.

“There are enough reasons to believe that many HNIs have issued stop-payment instructions,” said a banker on conditions of anonymity. “It happened in the case of Cairn and now it is happening in R-Power.

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It was one of the worst weeks in recent times for the global markets. According to Bloomberg, this was the steepest weekly drop since July 2002 as news from all corners – be it home construction or retail sales; financial performance from corporates or sub-prime woes for financial majors – painted grim picture for the US economy. The S&P’s 500 Index crashed 5.4 per cent this week to 1,325.19, the lowest level since September 2006, while Dow Average Industrial Average slumped 4 per cent and the tech-focussed Nasdaq by 4.1 per cent.

Global sentiment affected the domestic market mood too. The BSE Sensex plunged 8.71 per cent, while the broader NSE’s S&P CNX Nifty crashed 8 per cent on account of heavy FIIs’ selling.

None of the Indian ADRs listed on the US bourses ended last week on positive note. In fact, the average return posted by the 13 Indian counters saw even bigger slide at negative 8.9 per cent. Among them, the worst affected was Patni Computers, which fell by 15.1 per cent. It was followed by ICICI Bank (13.58 per cent), Sterlite Industries (13 per cent) and HDFC Bank (11.82 per cent). While HDFC Bank is scheduled to announce its quarterly number on Monday, ICICI Bank came out with impressive numbers on Saturday.

IT majors

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India’s biggest ever share offer, held by Reliance Power to raise nearly $3bn, was oversubscribed over 23 times on day three of the subscription, data showed yesterday.

The initial public offering of Reliance Power owned by Indian tycoon Anil Ambani was fully subscribed within 60 seconds of its opening on Tuesday.

“Demand continues to improve across smaller towns,” a merchant banker said on condition of anonymity.

The Reliance Power IPO saw overall subscription of 23.68 times on the penultimate day of the subscription period, official data at the National Stock Exchange showed at 1230 GMT.

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