Sensex ends down 2.2 pct; had fallen 11.5 pct

By Prashant Mehra and Narayanan Somasundaram

MUMBAI (Reuters) - The BSE Sensex ended down 2.2 percent on Monday, after a sharp afternoon rally saw it pare an 11.5 percent fall, as buying by local institutions triggered some hectic short covering in late trade.

The index has dived more than 20 percent in four sessions and is down 58 percent this year, caught up in a global maelstrom that has seen investors aggressively cutting their exposure to emerging markets.

State Bank of India ended down 8.6 percent at 1,056.60 rupees. Shares in India's biggest bank had tumbled as much as 14.3 percent to 1-½ year lows on worries about bad debt provisions, despite SBI beating forecasts with a 40.4 percent rise in net profit.

Rival ICICI Bank bucked the broader trend, rising 2 percent to 316.30 rupees after an unexpected rise in profit.

"Foreign funds continued to sell, but concept of gross undervaluation of most stocks is staring at us, pushing local investors to pick stocks," said Jayesh Shroff, fund manager at SBI Mutual Fund.

Foreign funds have sold shares worth $12.6 billion so far in 2008, including $3.3 billion so far in October, after pumping in a record $17.4 billion in 2007.

The 30-share BSE index fell 191.51 points to 8,509.56, its lowest close since November 14, 2005, with 21 components losing ground. The index tumbled as much as 11.5 percent during the day, to its lowest levels since Oct. 2005.

The 50-share NSE index ended down 2.31 percent at 2,524.20 points, its weakest close since Nov. 10, 2005. after it had fallen as much as 12.8 percent during the day to its lowest level since July 2005.