Sensex posts biggest weekly fall in 18 yrs

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Sensex soars by 409 pointsSensex sheds early gains as RIL tumblesSensex closes below 17,000 levelSensex nosedives by over 200 pts

Mumbai, October 10:: worst financial crisis in 80 years would not spare India.

Industrial output in August grew 1.3 per cent from a year earlier, its slowest pace in nearly 10 years, indicating high interest rates were crimping demand and analysts said the central bank was likely to focus on easing liquidity.

The Reserve Bank of India slashed the proportion of deposits that banks must keep with the central bank by one per centage point, in addition to a 50 basis points reduction announced earlier. The changes take effect on Saturday.

The moves pulled bank shares off their lows, but most ended in negative territory, with the sector index losing 7.8 per cent while HDFC Bank slipped 5.4 per cent to 1,046.35.

Top lender State Bank of India bucked the trend to rise 2.3 per cent to 1,352.15 rupees on buying by domestic funds.

Leading listed firm Reliance Industries dropped 7.4 per cent to 1,527 rupees, its lowest close in 18 months, on foreign selling, traders said.

Foreign funds have sold a net of $10.2 billion in Indian stocks in 2008, pushing the BSE index down 48 per cent. In comparison, they had ploughed in a record $17.4 billion in 2007, lifting the benchmark 47 per cent.

Engineering and construction leader Larsen & Toubro, dropped 8 per cent to 889.15 rupees, its weakest close since May 2007, after the weak industrial output data.

The 50-share NSE index ended down 6.65 per cent at 3,279.95.

Elsewhere in the region, Karachi's 100-share index was little changed at 9,181.35 on extremely thin volume. The Karachi Stock Exchange board will meet on Monday to review how long to keep an artificial floor under the share market and consider establishing an exit mechanism for foreign investors.

Colombo's All-share index closed down 4.39 per cent at 1,924.69.