Other Asian markets reeled under huge losses. Hong Kong’s Hang Seng (down 5.49 per cent), South Korea’s Seoul Composite (down 2.95 per cent), Taiwan’s Taiwan Weighted (down 0.91 per cent), China’s Shanghai Composite (down 5.14 per cent) and Japan’s Nikkei 225 index (down 3.86 per cent) fell on global concerns.

On Friday, Dow Jones industrial average lost 60 points, or 0.49%, a 16-month low after Wall Street was disappointed by US president George Bush’s $150 billion package of tax cuts and other measures. Dismal reports on employment, retail sales, factory activity and housing construction this month suggested that the US, the world’s largest economy, may be heading into recession.

On a closing basis, Sensex’s previous biggest single day point fall was on May 18, 2006, when it plunged 826 points or 6.75% to 11,391, spooked by a government circular on taxing investment gains and heavy FII selling. With today’s fall, the BSE Sensex has eroded 3601.42 points or 16.98 per cent from a record high of 21,206.77 hit on January 10 this year. The broader CNX S&P Nifty declined 496.50 or 8.70 per cent to 5,208.80.

Small and mid-cap stocks were battered today. The BSE Mid-Cap index tumbled 11.38 per cent while the BSE Small-Cap index crashed by 10.27 per cent to 10,911.66. Both these indices underperformed the Sensex. All sectoral indices registered steep losses of 5-13.3 per cent. Reliance Energy which plunged 16 per cent was the top loser from the Sensex pack.

Analysts say India will follow global cues in the coming days. “As housing is already known to be the weakest link of the US economy, markets will be looking towards next week’s raft of data such as durable goods orders and personal income and outlays, as well as the FOMC meeting on Tuesday and Wednesday. At this point, a 50 bps rate cut has been fully priced in and seems the most likely outcome, though there is some speculation that the Fed will deliver a 75 bps cut to try to keep a floor on growth,” said George Worthington, Chief Economist, Asia-Pacific IFR Markets, Thomson Financial.

... contd.