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BSE Sensex tumbles to 2-yr low on recession fears

Mon Oct 6, 2008 7:56pm IST
 
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By Narayanan Somasundaram

MUMBAI (Reuters) – The BSE Sensex tumbled nearly 6 percent on Monday to its lowest close in more than two years as the world's worst financial crisis in 80 years and a looming recession sent global markets reeling.

More European governments offered blanket bank deposit guarantees as regulators from Washington to Seoul scrambled to contain the crisis, but the moves failed to reassure investors as money markets remained tight, reflecting reluctance by banks to lend to each other.

World stocks dived to three-year lows as investors fled to government bonds and the low-yielding yen, fearing efforts by policymakers might not be enough to prevent a sharp slowdown.

The 30-share BSE index dropped 5.78 percent or 724.62 points to 11,801.70, its lowest close since Sept. 12, 2006, with all its components falling.

"The kind of selling coming in is distressing. Buyers are on strike," said Jayesh Shroff, fund manager at SBI Mutual Funds. "And added to that there are domestic liquidity issues."

Outsourcers, which count global financial firms among their top clients, led the fall on fears of drastic cuts in technology budgets. The sector index was down 6 percent.

In the broader market, losers outnumbered gainers by more than 8 to 1 on volume of 243.8 million shares.

The benchmark, which fell as low as 11,732.97 at one stage, registered its largest daily percentage fall since March 17. The index has shed more than 42 percent in 2008.  Continued...

Russian Finance Minister Alexey Kudrin poses with his G20 colleagues and central bank leaders during the family photo at the G20 Finance Ministers meeting at a hotel in St. Andrews, Scotland. REUTERS/POOL New
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