The benchmark Sensex tumbled 7 per cent on Friday and posted their biggest weekly fall in nearly 18 years as panicky investors joined a global selloff on recession worries, with weak industrial data adding to the gloom.
ICICI Bank plunged as much as 28 per cent to its lowest in almost four years, before trimming losses after the No. 2 lender’s joint managing director said the bank’s exposure to the global financial crisis was small and it had sufficient liquidity.
Sliding stocks sent the rupee to an all-time low against the dollar, while a cash crunch lifted overnight cash rates to their highest in 19 months.
Alarmed by the turn of events, the central bank slashed its cash reserve requirement for banks to free up some $12 billion in funds, but the move failed to calm jittery nerves.
“Investors confidence has been shattered by the kind of falls we have seen. Global markets are playing havoc and nobody is sure how much pain is still left,” said K.K. Mital, head of portfolio management Services at Globe Capital.
Shares in ICICI Bank, which have lost 44 per cent since the mid-September Lehman Brothers’ collapse, ended down 19.7 per cent at 364.10 rupees — their biggest single-day fall, and down 27.8 per cent on the week.
The stock was the most heavily traded on the Bombay Stock Exchange, clocking volume of 11.6 million shares.
The 30-share BSE index ended down 7.1 per cent, or 800.51 points, at 10,527.85 points, its lowest close since July 2006. It was the sharpest one-day per centage fall since January this year.
All but two components were in the red. In the broader market, losers swamped gainers 5:1 on volume of 317.3 million shares.
For the week, the benchmark lost 15.95 per cent, its worst performance since December 1990.
“The sentiment is battered. It’s time to stay away from the market,” said Ambareesh Baliga, vice-president, Karvy Stock Broking.
Infosys Technologies fell as much as 17 per cent after the No. 2 software exporter cut its forecast in dollars for the full year citing the global economic turmoil even as its quarterly profit rose 30 per cent.
The BSE index, among the worst performer in Asia, fell as much as 9.6 per cent at one stage to more than half below its record high of 21,206.77 hit in January, before trimming losses on domestic institutional buying.
Traders said the outlook was weak and a global recession in the wake of the worst financial crisis in 80 years would not spare India.
Industrial output in August grew 1.3 per cent from a year earlier, its slowest pace in nearly 10 years, indicating high interest rates were crimping demand and analysts said the central bank was likely to focus on easing liquidity.
The Reserve Bank of India slashed the proportion of deposits that banks must keep with the central bank by one per centage point, in addition to a 50 basis points reduction announced earlier. The changes take effect on Saturday.
The moves pulled bank shares off their lows, but most ended in negative territory, with the sector index losing 7.8 per cent while HDFC Bank slipped 5.4 per cent to 1,046.35.
Top lender State Bank of India bucked the trend to rise 2.3 per cent to 1,352.15 rupees on buying by domestic funds.
Leading listed firm Reliance Industries dropped 7.4 per cent to 1,527 rupees, its lowest close in 18 months, on foreign selling, traders said.
Foreign funds have sold a net of $10.2 billion in Indian stocks in 2008, pushing the BSE index down 48 per cent. In comparison, they had ploughed in a record $17.4 billion in 2007, lifting the benchmark 47 per cent.
Engineering and construction leader Larsen & Toubro, dropped 8 per cent to 889.15 rupees, its weakest close since May 2007, after the weak industrial output data.
The 50-share NSE index ended down 6.65 per cent at 3,279.95.
Elsewhere in the region, Karachi’s 100-share index was little changed at 9,181.35 on extremely thin volume. The Karachi Stock Exchange board will meet on Monday to review how long to keep an artificial floor under the share market and consider establishing an exit mechanism for foreign investors.
Colombo’s All-share index closed down 4.39 per cent at 1,924.69.
The world equity index fell to a five-year trough and equity trading in Russia, Iceland, Austria, Ukraine and Indonesia were halted while nearly half of Milan stocks were suspended for excessive losses just hours before finance chiefs of seven rich nations meet in Washington.
Wall St slides on global rout, bank woes
New York, October 10:
US stocks slumped at the open on Friday, with the benchmark S&P 500 falling below the 900 mark, as fears that tighter credit may send the global economy into recession slashed the appetite for risk.
The Dow Jones industrial average slid 401.27 points, or 4.68 per cent, to 8,177.92. The Standard & Poor’s 500 Index was down 6.43 per cent, or 58.48 points, at 851.44. The Nasdaq Composite Index was down 69.09 points, or 4.20 per cent, at 1,576.03.
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