Indian shares dip 7% as investors join global selloff

Mumbai: Indian shares tumbled 7 per cent on Friay 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 (Dh44 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 Rs364.10 - their biggest single-day fall, and down 27.8 per cent on the week.

BSE down

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 percentage 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.