Indian Government to inject more money into market

Finance minister P Chitambaram said that government of india is ready to inject more money into tumbling share markets as indian stock markets took a blood bath during intraday trading. sensex closed 3.9% down after falling a whopping 9% in intraday trading.

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Panic gripped the stock and foreign exchange markets on Wednesday as a global financial turmoil intensified worries of a recession and sent stocks reeling worldwide. India's main BSE share index fell more than 8 percent at one stage to its lowest in two years, but recouped partly to be down 3.8 per cent by 0911 GMT.

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Foreign funds have pulled out a net $9.9 billion from Indian shares this year, after ploughing in a record $17.4 billion in 2007.

"I am hopeful investors will start coming to the market," Chidambaram said. On Monday, the Reserve Bank of India announced a surprise half a percentage point cut in the proportion of deposits that banks must keep with the central bank.

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The reduction, which is expected to release Rs 20000 crores ($4.1 billion) into the banking system, was intended to alleviate pressures on local markets due to the global financial crisis, RBI said. The government eased norms for foreign borrowings by companies, while the capital market regulator relaxed rules for indirect investments by foreign institutions in stocks.

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