The BSE Sensex fell below 12,000 points for the first time in more than two years on Monday. The fall came as concerns grew of acceleration in foreign fund withdrawals amid fears the credit crisis would lead to a global recession. More European governments offered blanket bank deposit guarantees as regulators from Washington to Seoul scrambled to contain the deepest financial crisis in 80 years.

But the flurry of measures failed to reassure investors as stocks in Asia Pacific outside Japan dropped more than 6 per cent to their lowest in nearly three years. The market fell as much as 4.57 per cent to 11,953.53 on Monday, lowest since September 20, 2006.

“Money is very dear and all assets across the globe are correcting. Indian equities are no exception,” said the head of research at Dolat Capital, Sanjeev Patkar. “Investors are realising it is better to sit on cash.”