New York, October 10
The US benchmark index Dow Jones Industrial Average has plunged to its lowest level in five years, amid negative market sentiments in the world economy and some analysts predicting that recovery could take a long time.

In the last 90 minutes of trading, the Dow index dropped to 8,579.19, the lowest level in five years, down as much as 679 points. In percentage terms the Dow saw its 11th largest since the index came into effect, with a fall of 7.3 per cent yesterday.

The fall was witnessed even as foreign ministers of major powers are to meet today in Washington to chalk out steps to restore confidence in the light of failure of measures taken so far, including cut in interest rate, to stem the blood bath. Analysts said after the seventh straight day of losses, stocks have lost around $2.3 billion in a week as investors saw their wealth plummeting by $8.4 trillion after year-long decline.

The New York Times reported that no corner of the market was left untouched as investors dumped stocks en masse with 1,754 stock falling and just 87 rising.

In the last six trading days, the Dow has plummeted a staggering 2,251.8 points losing 20.8 per cent. Besides, 'The Times' quoted analysts as saying that at current prices, the market is suggesting that investors fear the country could face a severe and long recession that has not been seen since at least the early 1970s.

The global stocks have continued to suffer despite the approval of $700 billion bailout package, Dutch government readiness to pump 20 billion euros in the market to shore up banks and other European nations considering similar injection of capital to unfreeze credit markets. — PTI

London, October 10
Asian and European markets today extended their losing streak following the widening of the global financial crisis with Singapore falling into recession and Japanese insurer filling for bankruptcy protection.

Japan's benchmark index Nikkei 225 dropped nearly 10 per cent to settle at 8,276.43 points, following country's insurer Yamato Life Insurance Co filing for bankruptcy protection because of market turmoil.

While Singapore's Straits Times index plunged more than 7 per cent to 1,942.50 points, with the country falling into recession after two consecutive quarters of negative growth.

Besides, European market also plunged following the gloom in the US market. London Stock Exchange's FTSE 100 was trading down 7.24 per cent at 4,001.46, Germany's Dax Index was down nearly 10 per cent, while France's CAC 40 Index fell over 8 per cent.

Hong Kong's Hang Seng fell 7per cent, while Korean Kospi Index tumbled over four per cent and China's Shanghai SE Composite Index also fell nearly four per cent.— PTI

New Delhi, October 10
The signs of slowdown have started showing with the industrial growth nearing a halt. According to the industrial production figures released by the government today, in the month of August, industrial production has dipped to 1.3 per cent as against 10.9 per cent growth last year during the same period.

Discounting the government’s own data, finance minister P Chidambaram said the data released was not very reliable and satisfactory. “The Index of Industrial Production (IIP) numbers are not very satisfactory and at the same time not very reliable. I have conveyed my concerns a couple of months ago to the ministry of industry, and I am conveying them today,” the finance minister stated.

Economists attribute the fall in industrial growth to the tight monetary policies taken up in the past few months to combat rising inflation.

However, government’s own statisticians Pronab Sen, who is the chief statistician, defended the data saying that it was as reliable as it was years ago.

However, the finance minister said an independent economist has pointed out to him at least two or three features of the current IIP numbers which were quite out of line with any kind of calculation.

“It does not sound right at all, as the IIP numbers have to be looked into carefully,” Chidambaram added.

In this year between April and August (five-month period), the industrial growth saw a big drop to 4.9 per cent, from 10 per cent. The growth in key infrastructure industries dipped to 2.3 per cent in August 2008, as compared with 9.5 per cent in the same period last year.

New Delhi, October 10
Admitting to the problems of credit and liquidity crunch in the banking system and the stock market, the government said today it has set up a committee to sort out the situation. Announcing a high-powered committee, headed by finance secretary Arun Ramnathan to assess the requirements, finance minister P Chidambaram said the committee would visit Mumbai and submit an interim report within a week on how the situation could be tackled.

Reassuring the investors from Washington, where the finance minister is participating in the IMF-World Bank meet of G -20 nations, Chidambaram said the World Bank report states that India was in a better position to weather the global storm.

“Credit is the lifeline of trade, commerce and business and, hence, it is important that credit continues to flow to all sectors of the economy. In consultation with RBI and other regulatory authorities, government will address the liquidity and other concerns about the economy,” the finance minister said in a statement.

Chidambaram further said he had received a number of representations from banks, other financial entities and intermediaries, corporates and small businesses that the issue of liquidity must be addressed in a comprehensive and time-bound manner.

The other members of the high-powered group are representative of RBI, T.S. Narayanaswamy, chairman, IBA & CMD, Bank of India, U.K. Sinha, CMD, UTI, Y. M. Deosthalee, also chief financial officer, L&T and director-in-charge, L&T Finance Limited , R.M. Mallya, CMD, SIDBI. Besides, the group has been authorised to co-opt any more members, if necessary.

“It is also important to maintain our confidence in the Indian economy. As the cabinet noted on Wednesday, the fundamentals of our economy are strong and there are many indicators which affirm the sound fundamentals,” the finance minister said.

The finance minister said the economy was facing 'spillover and ripple' effects of the global storm but assured that the RBI was ready to take further steps and infuse more liquidity, if necessary.

Giving an advice to the investors, he said “those who have money should spend some money and should save some money. Savings in banks are completely safe. Depending on your risk threshold you can save in some other instruments. Someone with a low-risk threshold should save in a bank,” he said.

“Between now and October 25 or so, a huge amount of liquidity will find its way into the market through CRR cut, fertiliser subsidy, additional spending on National Rural Employment Guarantee schemes and payment to banks for loan waiver,” the finance minister said.

New Delhi, October 10
The country's top private sector lender ICICI Bank today said its financial position remains strong and "vested interests" were continuing to hammer down its share price on the bourses.

Noting that there was no cause for panic among its depositors, ICICI Bank's joint managing director and CFO Chanda Kochhar said, "There is nothing like run-on the bank and the company's financial situation continues to be very strong." Stressing that ICICI Bank has a strong liquidity position, Kochhar told PTI over telephone from Mumbai that the bank's market value is plummeting because the perception was getting destroyed by rumours.

Asked for comments on the bank's market capitalisation today slipping below its net worth, Kochhar said, "It only means two things — one, perception is getting destroyed by rumours, so on that my comment would be performance to speak for itself and secondly, we can do as much as possible to clarify the facts."

"Beyond that, we can’t do much about rumours. We are here to clarify as much facts as possible," she said, adding that at the current market value, it "only means that it is very-very good investment for people to invest their money".

Asked whether ICICI Bank would cut the interest rates in the wake of RBI's 150-basis points reduction in CRR, she said interest rate would not be impacted immediately from the banking regulator's move given the current liquidity situation in the market. — PTI

New Delhi, October 10
Giving a sigh of relief to the government in the midst of the market mayhem, inflation fell moderately to 11.80 per cent.

Beating expectations, the rate of price rise, measured by the wholesale price index, declined by 0.19 per cent for the week ended September 27 from the preceding week due to lower prices of food articles like fruits, vegetables, cereals, pulses and some manufactured items.

Inflation has remained below 12 per cent for two straight weeks now, after hovering over 12 per cent for nearly three months.

The finance ministry, however, said inflation of 30 essential commodities marginally increased to 7.74 per cent in the latest week under review, from 7.70 per cent in the preceding week. Among these, seven items recorded a fall in their prices, while that of 16 others remained unchanged.

Price moderation is more than expected, say economists, as tightening measures and lack of liquidity will have an impact on prices of food and manufacturing items.

The prices of fruits and vegetables during the week declined by one per cent, cereals and pulses by 0.1 per cent and ground nut by two per cent.

Among food articles, milk prices rose by one per cent, while prices of imported edible oil soared by 5 per cent.

Mumbai, October 10
Battered under an onslaught of rumours continuing for several weeks, ICICI Bank today lost out its place as the country's most valued private sector bank to HDFC Bank, as its share price fell by about 20 per cent.
Market capitalisation of ICICI Bank, the top private sector lender in terms of asset size, today fell to Rs 40,512 crore, as against Rs 44,461.22 crore of rival HDFC Bank.

Shares of ICICI Bank today settled 19.71 per cent down at Rs 364.10, after a partial recovery from an intra-day fall of close to 28 per cent to its three-year low of Rs 326.70.

In comparison, HDFC Bank shares fell by 5.65 per cent to close at Rs 1,046.25, after recovering from its intra-day low of Rs 975.55.

Till a few weeks ago, ICICI Bank used to be the most-valued bank in the country across both private and public sector entities. However, last month it lost this position to public sector giant SBI, which now carries a market value more than double that of ICICI Bank.

In the overall banking sector, ICICI Bank now ranks as the third most valued after SBI and HDFC Bank.

Today's fall in ICICI Bank shares is the second major plunge within a fortnight after a 14 per cent dip on September 29. — PTI

Mumbai, October 10
Software services provider Infosys Technologies today posted a 30 per cent jump in quarterly profit helped by a weaker rupee, but revised its guidance downward for the full year due to the global credit crisis.

Infosys, which develops application and offers back office services, said its July-September consolidated net profit rose to Rs 1,432 crore from Rs 1,100 crore in the year-ago period, while its revenue was up 19 per cent at $1,216 million from the same quarter last fiscal.

The company has marginally been able to meet the guidance given earlier for the Q2 at $1,215-1,225 million.

"We benefited from the depreciation of the rupee against the US dollar during the quarter, which was partially offset by the sharp appreciation of the US dollar against all other major currencies," Infosys CFO V Balakrishnan said.

However, the company was forced to lower its full-year profit forecast and abandon its bid to acquire UK-based Axon due to a deteriorating economic outlook.

The company has revised its US-dollar revenue guidance to factor in the current global credit crunch.

"We have revised our US-dollar revenue guidance to reflect the current economic situation and the drastic depreciation of major global currencies against the US dollar," Infosys CEO S Gopalakrishnan said in a statement.

As per the revised guidance, the full-year revenue is expected to be $4.72-4.81 billion compared with the previous guidance of $4.97-5.05 billion. For the quarter ending December 31, the consolidated revenue forecast is between $1,175-1,220 million, a year-on-year growth of 8.4-12.6 pc. — PTI

London, October 10
Oil fell more than $4 a barrel to a one-year low on Friday, depressed by expectations global demand growth will shrink if the credit crisis pushes the world economy into recession. Economic weakness spurred the International Energy Agency to cut its forecasts for world oil demand growth for 2008 to its lowest rate since 1993.

US light crude for November delivery was down $4.19 at $82.40 a barrel by 0915 GMT. It touched a session low of $82, its lowest since October 2007.

Prices have dropped more than 40 per cent from a peak of $147.27 in July. London Brent crude was down $4.11 a barrel at $78.55, below $80 for the first time in a year. — Reuters