Business

Sensex plunges 725 points

MUMBAI: The Indian stock markets on Monday tumbled in tune with other markets across the world on fears of widening credit crisis, which would drag the world economy into recession. The Bombay Stock Exchange 30-share sensitive index (Sensex) dipped 724.62 points or 5.78 points to 11801.70. Reflecting an all-round sell-off, all sectoral indices ended with a loss of 3.5-11 per cent. The BSE-CD index dropped by 11.01 per cent, realty by 9.91 per cent, metal by 9.27 per cent, CG by 7.27 per cent and the BSE-Power by 7.24 per cent.

The U.S. stocks also plunged on Monday on its opening. While writing this report the Dow Jones Industrial Average was down 493.89 points, or 4.78 per cent, at 9831.49. The Standard & Poor’s 500 index was down 63 points, or 5.73 per cent, at 1036.23. The Nasdaq Composite Index was down 117.52 points, or 6.03 percent, at 1829.87. It was the first time the Dow had broken below the 10000-mark intraday since October 2004. Wall Street’s tumble followed a sharp drop in Asian markets, while major European equity indices fell 8 per cent. Japan’s Nikkei fell by 465.05 points to 10473.10 and Hong Kong’s Hang Seng lost a huge 878.64 points at 16803.30. In the European markets U.K.’s FTSE 100 lost 379.24 points at 4501.04, French CAC 40 lost 314.14 points at 3766.61 and the German Dax lost 362.79 points at 5434.24.

In a move to pump in liquidity in the domestic market, the Reserve Bank of India has cut the cash reserve ratio (CRR) by 50 basis points to 8.5 per cent with effect October 11. The cut will infuse Rs. 20,000 crore into the system. CRR is the portion of funds that banks have to park with the central bank.

“The CRR cut is ad hoc and temporary in nature. Liquidity management will be priority amid global uncertainty. The major priority of policy will be to anchor inflation expectations. We will continue to review the CRR situation on a continuous basis,” RBI said.

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