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Bangalore: Indian shares dropped 5.87 per cent on Wednesday, unwinding most of a nine per cent rise over the previous two days as concerns grew about corporate earnings and liquidity conditions in Asia's third-largest economy.
Sentiment was also dented by weaker overseas markets as risk aversion resurfaced on worries that recent measures by policymakers across the world to shore up the ailing financial system may not be enough to escape a global economic recession.
Larsen & Toubro (L&T) ended down 11 per cent at Rs93.15 after the engineering and construction major reported a lower-than-expected 31 per cent rise in quarterly net profit.
The main 30-share BSE index dropped 674.28 points to 10,809.12, its lowest close since Friday, when it had ended at its lowest in more than two years. All 30 components fell on the day.
"The weakness in the Indian markets is likely to continue in the short term as investors await measures from policy makers to ease the liquidity situation," said D.D. Sharma, vice-president at Anand Rathi Securities.
The 50-share NSE index fell 5.12 per cent to 3,338.40.
Currency: Rupee falls
The Indian rupee fell one per cent yesterday following heavy losses in the local stock market and pressured by offshore related dollar demand, with central bank intervention helping it to pull back from the day's low.
The partially convertible rupee ended at 48.525/540 per dollar, weaker than 48.04/06 at close on Tuesday, but off 48.62 when state-run banks sold dollars on behalf of the central bank, traders said. "There is still risk aversion globally which is hurting," a trader said.
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