New Delhi - After dipping by over 3 per cent in early trade, India's stock indices staged a smart recovery on assurances by the country's federal bank that it was committed to ensuring adequate liquidity in financial markets.

The Bombay Stock Exchange's benchmark 30-share Sensex saw a day of volatile trading. Beginning on a positive note, it hit the day's lowest of 8,956 points after Japan announced it had slid into recession. It then recovered to close at 9291.01 points, about 1.01 per cent below its previous close.

The Reserve Bank of India (RBI) deputy governor Rakesh Mohan's statement and a positive start by European markets helped the recovery.

The broader 50-share S&P CNX Nifty of the National Stock Exchange also recovered after losing over 3 per cent to close at 2799.55, about 0.38 per cent below Friday's close.

Meanwhile, Indian Finance Minister P Chibambaram, talking about the G20 summit, said world leaders had adopted a detailed and ambitious plan to meet the global financial crisis.

He said the impact on the global economy would result in a slowdown in some sectors in India, but immediate rate cuts to increase liquidity were unlikely as inflation, still above 8 per cent, was still not in a comfort zone.

India, one of the world's fastest-growing economies, has posted gross domestic product growth of over 9 per cent since 2006. But the forecast for the financial year
2008-2009 has been lowered to 7.5 per cent by government and less than 6 per cent by independent agencies.

However, Mohan of RBI said the federal bank had been consistently acting to make sure financial markets work efficiently and adequate liquidity was available in the system and would continue to do so.

The RBI has taken several measures over the past month to improve liquidity and boost growth by cutting its key lending rate by 150 basis points to 7.5 per cent and lowering banks' reserve requirements. (dpa)