Stocks shed 3.8% on India's main market

Mumbai: India's main stock index fell 3.8 per cent on Tuesday, taking its losses to 15.2 per cent over five consecutive sessions, as prospects of a global recession and massive job cuts at Citigroup rattled investors.

Promises by the finance minister the government will take steps to stimulate the economy to offset the impact of the global slowdown failed to soothe the sentiment.

Financials led by ICICI Bank, the country's second-largest lender, led the fall taking cues from its peers in regional markets that dropped on fears an economic downturn could spark defaults.

The stock fell 6.8 per cent to Rs360.75, its lowest close in three weeks.

Selling pressure

Top lender State Bank of India slipped 5.1 per cent to Rs1,108.30 and the sector index dropped 4.5 per cent.

The 30-share BSE index shed 3.81 per cent, or 353.81 points, to 8,937.20, its lowest close since October 27 when it hit a three-year low of 7,697.39.

"There is consistent selling pressure. The consensus is building the market would test its previous low," said Rajesh Jain, chief executive at Pranav Securities.

All but one of the index components fell, while in the broader market losers overwhelmed gainers in a ratio of almost 3:1 on moderate volume of 226.8 million shares.

The index fell as much as 4.5 per cent in early deals and is down 56 per cent so far in 2008 making it one of the worst performers in Asia.

"We will take steps to stimulate the domestic economy to compensate for the downside caused by the downturn in the world economy," Finance Minister Palaniappan Chidam-baram told the World Economic Forum's India Summit yesterday.