In the continuing meltdown, the stock market lost nearly 900 points, leaving investors poorer by about Rs 10 lakh crore in two days of mayhem triggered by fears of a recession in the US Economy.
The government, on its part, did well to assure investors scared by the carnage on Dalal Street that adequate liquidity would be ensured for market players - many of whom had borrowed money to invest in stocks at higher levels.
The promise led to a remarkable recovery after a loss of over 2,200 points in initial trading that was marred by suspension. The Sensex closed the day at 16,729.94, a net fall of 875.41 points or 4.97 per cent from yesterday's close.
Besides the development in the US that prompted Foreign Institutional Investors (FIIs) to take a sell call, investors were also stalked by the fear that drying up of margin money could lead to a payment crisis.
In fact, the market has shown a declining trend during the whole of last week and investors have lost a wealth of over Rs 15 lakh crore in the seven trading sessions – a meltdown whose magnitude is unparallelled, during which the Sensex shaved off nearly a fifth of its level.
The soothing touch was, however, provided by blue chip Companies Bharti Airtel and Tata Motors, who were the only gainers among the 30 shares that make up the Sensitive Index.
Finance Minister P Chidambaram sent out a confidence boosting message to investors immediately after the BSE authorities suspended trading within a minute of commencement.
"I am assured by RBI and all the banks that enough liquidity will be provided to brokers and market players.
Liquidity will not be an issue," Chidambaram said.
"We had anticipated that Markets will open today on a downward note and may hit the circuit breaker," he said in New Delhi.
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