The 30-share Sensex, which tumbled nearly 2273 points causing trade to be suspended for one hour, closed the day at 16,729.94, after touching the day's low of 15,332.42 points.

The index had tanked 1408 points yesterday on fears of a possible recession in the US.

Finance Minister P Chidambaram's statement on the economy's health appears to have had a positive impact on investor sentiment.

The National Stock Exchange index Nifty ended the day with a loss of 309.50 points at 4899.30. It had touched the day's low 4448.50 and a high of 5230.35 points depicting the volatile trend of the markets.

Market men said tumbling commodities prices and a drop in Asian markets added to the concern that world economic growth is faltering.

"We had anticipated that markets will open today on a downward note and may hit the circuit breaker," Chidambaram said in New Delhi after exchange authorities suspended trading due to a fall in stock prices minutes after the bourse opened.

The circuit breaker is activated when the market moves 10 per cent, either up or down.

"I am assured by RBI and all the banks that enough liquidity will be provided to brokers and market players. Liquidity will not be an issue," Chidambaram said.