Shares recovered some losses after China reduced interest rates,its first in six years, and cut reserve requirements for banks. The S&P CNX Nifty of the National Stock Exchange (NSE) breached the crucial 4,000-level but short-covering pared the loss to 155.55 points, or 3.68%, to end at 4,072.90 points. This is the Nifty's biggest decline since July 15. Stocks tumbled on fears of more selloff by foreign institutional investors (FIIs) amid uncertainty in the global financial market. The losses in the stock market and the heavy demand for dollar from importers sent the rupee past 46 against the dollar for the first time in two years.Dealers said the Reserve Bank of India intervened in the market, selling dollars through state-run banks to halt the Rupee's sharp fall, but that did not help much,as the quantum of selling was not too large. The currency ended at 46.05/06 against the dollar, after hitting a low of 46.08, its weakest since September 20, 2006. It was 0.65% weaker than Friday's close of 45.75/76. The rupee slumped on concern investors will dump riskier assets, including emerging-market securities. Crude oil prices
also fell to a seven-month low after Lehman Brothers Holdings Inc filed for bankruptcy and refineries along the Gulf of Mexico escaped major damage from Hurricane Ike.Metals and crops also dropped, prompting a 5% slump in the S&P GSCI Index of 24 commodities. Crude oil for October delivery declined $7.05, or 7%, to $94.13 a barrel in electronic trading on the New York Mercantile Exchange.That's the lowest since February 14. Lehman Brothers was suspended from energy and commodities trading in London.Analysts said the news pertaining to Lehman Brothers and Merrill Lynch has shaken investor confidence. The bomb blasts in New Delhi that killed 21 people on Sept 13 also contributed to investor woes. The depreciation of the dollar and the slip in crude prices are good developments for the Indian markets. The Dow Jones industrial average fell 299.22 points, or 2.62%, to 11,122.77 in early trade. The Standard & Poor's 500 Index declined 31.40 points, or 2.51 percent, to 1,220.30. The Nasdaq Composite Index fell 40.18 points, or 1.78%, to 2,221.09. European stocks shed more than 4%.Among them, Lehman Brothers shares in Frankfurt tanked 90%. Stocks sank in Southeast Asia; Australia, Singapore and Taiwan all dropped 3 to 4%.