Greece hits markets hard

The global markets were battered on Tuesday despite the US Dow closing at over 140 points on Monday. This is because the investors were jittery over the 110 billion euros bail-out plan by the Eurozone-International Monetary Fund would really help Greece.

The commodities markets worldwide also took a hit as Australia imposed a tax on mining in order to save its natural resources. This affected the big mining companies that were down on the London Stock Exchange and the metal and steel companies in India.

Companies like Sterlite which have mining interests in Australia took a beating. The metal index was the hardest hit on the Bombay Stock Exchange.

Hindalco was down six per cent, while Sterlite Industries and Tata Steel that lost four and five per cent respectively.

The Indian stock markets closed their lowest in eight weeks. The Nifty broke its crucial support level of 5,200 in the afternoon after the European markets skid on opening over the nagging sovereign debt crisis.

It closed down 74.35 points at 5,148.50 while the Sensex was not far from breaching the 17,000 level as it closed at 17,137.14 down 248.94 points. Analysts said that the Eurozone is impacting liquidity and sentiment which in turn impact fund flows.

The FIIs registered a negative inflow on Monday. They felt that the Nifty could try and make a comeback on Wednesday but the short term scenario is not good.

The European crisis in not expected to go away soon. There was a strong possibility that other European nations like Ireland, Spain and Portugal may request for aid said First Global. It said these regions do not have an exceptionally high government debt, but a highly leveraged private sector which led to S&P downgrading Portugal and Spain last week.

The problem seems to be that though Greece has promised to cut its spending and hike taxes to the tune of 30 billion euros over three years, there is scepticism over whether it can achieve this with social tensions and growing unrest.

According to Reuters, Moody’s Investors Service official said the bailout does not mark the end of the country’s fiscal crisis.

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