Sensex sheds 328 points on global turmoil

Index fell below 16,000 level but recovered to close at 16,141.67.

Dalal Street joined a global selling spree after new warnings of world recession emerged and fears grew over the future of European banks with heavy exposure to sovereign debt. Investors across the world picked up on the mounting anxiety evident in the US and Europe,where the markets saw fresh carnage on Thursday.

The Sensex fell below the 16,000 level after nearly 15 months on sustained unloading,but it recovered a little to close at 16,141.67,still down by 328 points. Adding to woes in the region were fears that a slowdown in the galloping growth seen in China a key driver of the world economy could hit equities.

The worldwide selloff came after Wall Street investment bank Morgan Stanley warned that the US and eurozone economies were dangerously close to a double-dip recession. Stocks were further punished by a fresh round of gloomy economic data from the US such as jobless claims,and growing doubts about the ability of European banks to withstand the 17-nation eurozones debt crisis.

In India,three largest IT companies Tata Consultancy,Infosys and Wipro dragged the software services sector index down as much as 4.4 per cent. Infosys was the top loser in the Indian market,ending down 5.79 per cent at Rs 2,225.40,its lowest closing level in 21 months,on worries about a drop in outsourcing demand in a weak global economy. TCS slumped 3.96 per cent to Rs 929.80 and Wipro closed 2.29 per cent lower at Rs 320.50.

Even as the market tanked,Finance Minister Pranab Mukherjee discussed the situation in the wake of the debt crisis in the US and Europe with Reserve Bank Governor D Subbarao and Prime Ministers Economic Advisory Council Chairman C Rangarajan. As the advanced economies grapple with their problems,India is better positioned than most other nations to meet its problems, the Finance Ministry said in a statement.

The present crisis can be expected to encourage increase in the equity exposure by foreign pension funds and other long term institutional investors. India is well-positioned to capture this flow, the statement added.

Foreign funds pulled out Rs 902 crore from the market on Friday,taking the total outflows in August to around Rs 9,000 crore.