Sensex tumbles, biggest weekly fall in 18yrs

By Narayanan Somasundaram

MUMBAI (Reuters) - The Sensex tumbled 7 percent on Friday and posted its 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 percent 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 Reserve Bank of India (RBI) 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 percent since the mid-September Lehman Brothers' collapse, ended down 19.7 percent at 364.10 rupees -- their biggest single-day fall, and down 27.8 percent 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 percent, or 800.51 points, at 10,527.85 points, its lowest close since July 2006. It was the sharpest one-day percentage fall since January this year.