NEW DELHI: The BSE Sensex tanked over 700 points or 4.

1% on Thursday, its biggest percentage decline since October 2008, mirroring losses in global equities as investors fled risky assets across global markets on a grim US economic outlook. Global sell-off triggered the biggest point fall on Nifty since October 2008 and biggest percentage fall since August 2009. The 50-share NSE Nifty index fell 209.60 points or 4.08%, to close at 4,923.65, and the 30-share BSE Sensex dropped 704 points, or 4.1%, to end at 16,361.15. BSE Mid-cap Index fell 3.1 per cent and BSE Small-cap Index was 3.1 per cent lower. BSE Realty Index fell 5.6 per cent, BSE Metal Index fell 4.3 per cent and BSE Oil & gas Index declined 4.1 per cent. World stocks as measured by MSCI were down nearly 2.5 percent to a new year-low, making for a more than 14 percent year-to-date loss. The more volatile emerging markets stock index was down 4.7 percent for a 22 percent 2011 loss. European stocks tumbled nearly 4 percent, helping drag global equities to a fresh one-year low. Russian stocks were down nearly 5.0 percent in afternoon trading and the ruble extended its losses on dropping commodity prices and reduced global appetite for risk. The more volatile emerging markets stock index was down nearly 5 per cent for a 22 per cent 2011 loss. For more Views & Recommendations please click here Analysts highlight various factors that could have possibly led the fall in Indian markets: Rupee falls to 28-month low: The rupee dropped past 49 against the dollar on Thursday to its weakest in nearly 28 months following a global sell-off in shares and as the US currency extended gains against majors. The partially convertible rupee was at 49.55/56 per dollar, its lowest since May 15, 2009. It had closed at 48.325/335 on Wednesday. The rupee also holds the crown of worst performing currency in Asia, down 8% for the year as compared to its peers which are down 1-3%. The rupee closed at 48.98/99 per dollar, after hitting 49.18, its weakest since September 2, 2009, when it was down 1.7 percent on the day. The Reserve Bank of India (RBI) is suspected to be selling dollars in the forex market at around Rs 49.15 to arrest steep losses in the local unit after global risk aversion prompted investors to move into safer assets like debt. The central bank was likely to have started selling dollars from 49.15 per dollar, helping drive the partially convertible rupee back below the 49 mark, 11 dealers said. According to latest data, India's food inflation eased to 8.84 per cent for the week ended September 10 against 9.47 per cent a week ago. Fuel price index climbed to 13.96 per cent as compared to 13.01 per cent. The primary articles index was at 12.17 per cent compared to 13.04 per cent a week earlier. Falling rupee does not auger well for the inflationary situation which has kept the Reserve Bank of India on its toes. Further, depreciating rupee could also increase fiscal deficit on the back of high oil imports which account the majority of our import bill. A weak rupee could also negatively impact FII flows into the Indian markets as investing in India becomes costlier for FIIs. "The fall in rupee and dollar rise points to a market decline going forward," said Ashwani Gujral of ashwanigujral.

com. Rupee depreciation also augers well for IT companies, as they do most of their billing in dollar currency. Analysts believe that most India IT companies would have already hedged their positions and any rise in rupee would always auger well for the companies. "Most IT companies have hedged 25% to 30% of the receivables side to around Rs 47. So anything over and above that since we are talking about levels closer to Rs 49, this quarter is going to be good," said Phani Sekhar, Fund Manager-PMS, Angel Broking. "Dollar is expected to continue strengthening in the near future. However, the strengthening may be capped by the weak US economic conditions. With this backdrop, INR-USD exchange rate is expected to range between Rs. 46.5-47.5 per dollar in the near future," said Samruddha Paradkar - Associate Economist at CARE Ratings.