Indian shares fell 3.92 percent on Thursday on growing global recession fears and a weak earnings outlook, dealers said. The 30-share Sensex fell 398.2 points to 9,771.7, its lowest level since June 2006. The markets will now focus on the central bank review of monetary policy on Friday where economists expect the Reserve Bank of India to hold interest rates steady.
On Monday, the central bank slashed its key short-term lending rate by a surprise full percentage point to eight percent in a bid to stabilise domestic markets and spur growth.
The markets recovered briefly during intra-day trade on reports that the Securities and Exchange Board of India (Sebi) had voiced its unhappiness over overseas stock lending operations by foreign institutional investors that were being used for short-selling. "The Sebi move was a breather, but global concerns are just too strong," said Bhaskar Kapadia, partner at brokerage Pyramid Securities. The Sensex has fallen through the 10,000 points level twice in the past five days.