Chidambaram outside Parliament House on Friday. (PTI)

Mumbai, Oct. 24: Carnage, bloodbath, meltdown: investors ran out of epithets to describe the tsunami that engulfed global stock markets, including in India, on Friday.

At the end of a savage day of trading, the sensex tumbled almost 11 per cent to close at a three-year low of 8701.07, the Nifty — the other market bellwether — collapsed by 12.2 per cent, and the rupee plunged to a historic low of 50.15 against the dollar.

If that wasn’t bad enough, the RBI disappointed the markets by refusing to cut interest rates further even as it trimmed the growth forecast for the economy to a range between 7.5 per cent and 8 per cent.

For the sensex, it was the second largest fall in terms of absolute points at 1070.63; on January 21, the index had swooned by 1408 points.

A stream of bad news from the US, the UK, Japan and other countries spooked global markets. The biggest worry was the data that showed that the British economy had shrunk by 0.5 per cent in the third quarter of 2008. This is the first contraction in 16 years and re-ignited fears that the country had gone into recession.

In the US, software giant Microsoft issued a weak outlook while Sony Corporation, the Japanese electronics giant, said it had cut its annual sales and profit forecasts because of poor demand.

The sensex had opened lower at 9535.41 points, taking a cue from weak Asian markets. Stocks were pounded as foreign institutional investors hit the sell button.

In Delhi, finance minister P. Chidambaram tried to soothe markets by saying the authorities were looking to “adopt unconventional or unorthodox measures” and added that the RBI would pump in more money into the financial system if this was required. There was a buzz in the capital that the finance ministry might consider relaxing pricing rules for American and Global Depository Receipts.

“We are being affected by the ripple effects of the global crisis. It is necessary to remain calm and confident so that we can ride out this crisis,” Chidambaram said.

But the markets were tired of words and impatient with the reluctance to take action.

The real trouble for the market began after the RBI announced that it had no intention to trim its interest rates.

The comments of RBI governor D. Subbarao suggested that controlling inflation is still a priority in the run-up to the elections.

“The (RBI’s) focus would be on ensuring price and financial stability, anchoring inflationary expectations and maintaining the growth momentum,” Subbarao told reporters.

“Inflation continues to be a concern at 11 per cent — it is beyond the tolerance level and unacceptable. Despite its downward trend (in recent weeks), we cannot let our guard slip,” he added.

By noon in Mumbai, the selling wave turned into an avalanche with more disturbing news from Europe that the Dow Jones Futures had gone deep into the red, indicating a disastrous start to US markets again.

Analysts said foreign institutional investors (FIIs) were dumping stocks as they started to face redemption pressures. “The FIIs have no option but to sell because of these redemption pressures,” said Manish Sonthalia, vice-president (equity strategy) at Motilal Oswal Securities.

“This is not happening in India alone but across the world. They are scurrying to the safety of US treasury bonds,” he added.

Sonthalia conceded that he had not seen a carnage on this scale in the 15 years that he was associated with the capital markets.