And they all fell down...

Markets across the globe have fallen like nine pins..from Dalal Street to Wall Street, the gloom is everywhere.

Fears that the US government’s $700 billion package to bail out its troubled financial system might not be enough spooked markets across the globe. Dubbed by market players as a global crisis of confidence, it affected Indian markets too and the sensex on Monday ended 725 points (5.8%) lower at 11,802, its lowest close in two years. To get a sense of the global carnage, consider this: Hang Seng in Hong Kong was 5% off on the day, Nikkei in Japan 4.3%, Shanghai 5.2%, FTSE in London 4.4%, while the Dow Jones index was down over 700 points (7%) by mid day, trading below 10,000 for the first time in 4 years. The Brazilian index was trading over 15% down. The RBI has cut the cash reserve ratio (percentage of money banks must keep with the central bank on their total deposits) by 50 basis points (100 bps = 1%) to 8.50%. The move, which will be effective from October 11, is expected to release Rs 20,000 crore into the banking system. The Securities and Exchange Board of India (Sebi) has removed the restrictions on issuing participatory notes (P-notes) by foreign investors. The move is aimed at encouraging foreign fund inflows into the depressed stock market. On the BSE, for every stock that ended higher, nine stocks closed lower with 2,369 laggards to 281 gainers at the end of the day. And ALL the 30 sensex stocks closed in the red.Foreign funds were again at the forefront of selling, with the provisional data on the BSE showing a net selling of Rs 1,170 crore. In contrast, domestic funds, including insurance companies, bought shares worth Rs 661 crore. Sebi data showed that, so far this year, FIIs have taken nearly $9.5 billion out of the Indian market, the highest yearly outflow ever. Among the sensex heavyweights, RIL dropped 6.7% to a new 52-week closing low of Rs 1,642, Infosys fell 5.3% to Rs 1,318, while L&T ended 6.5% off at Rs 1,083, also a 52-week low. The biggest loser among sensex stocks was Sterlite, down 15.3% at Rs 335.On Monday, although there was across-the-boardselling, consumer durables, real estate and metals led the carnage on Dalal Street. While the consumer durables index lost 11%, real estate index lost 10% and metals 9.3%. So far this year, the real estate index has lost nearly 70% with some of the leading realty stock down over 80%. Post the session’s close, the banking as well as the market regulators stepped in and announced various measures that market players said would instil some confidence among investors. On Monday evening, Sebi announced that some of the curbs it had imposed on foreign institutional investors about their India exposure were being removed. Soon, the RBI said that it was cutting the key policy rate, cash reserve ratio (CRR), by 50 basis points, to induce more money into the banking system.Brokers and dealers feel that the regulatory steps were in the right direction and it would work in the market’s favour in the medium to long term.