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Domestic equity markets resumed on a nervous note Wednesday after rising nearly 300 points a day earlier, as the rate cut by China's central bank on Tuesday failed to revive investor sentiment with fresh local currency depreciation further adding to pessimism. The Asian equity markets to remained subdued taking cues from the Wall Street, where shares ended lower after a rally at the open.

In fact, the benchmark Sensex dropped nearly 350 points from yesterday's close to touch a low of 25,687.69 before witnessing sharp side-ways movement.

At 10.35 am, the BSE S&P Sensex was down 18.33 points at 26,014.05 even as the Nifty moved into positive zone with a point gain at 7,882.15.

The rupee once again came under pressure and began its slide, declining to 66.23 against the dollar, down 13 paise.

Among the laggards, shares of HeroMoto Corp fell 2.8 percent to Rs 2,407.25, BHEL declined 1.8 percent to Rs 228, Bharti Airtel slipped 1.1 percent to Rs 345 and HDFC was down 0.8 percent at Rs 1,135.95.

In view of sliding Chinese equity markets and deteriorating health of its economy, the People's Bank of China opted for aggressive monetary easing yesterday and lowered one-year lending rate by 25 basis points to 4.6 percent while cutting deposit rate by 25 basis points to 1.75 percent effective August 26.

Investors fear the rate cut decision by the Chinese central bank, its fifth straight cut since November, may not be enough as the rapidly slowing economic growth could worsening further and a demand revival will not be soon on the cards.

The Chinese markets rose 150 percent despite expectation of significant slowdown of Chinese economy by most analysts. Thus the burst in bubble was awaited. It would be surprising to note that even after such a major crash the Chinese Shanghai Composite Index is up 32 percent year-on-year, said G Chokkalingam, Founder & Managing Director, at Equinomics Research & Advisory.

According to a report in Reuters, China's key share indexes attempted to move higher several times in morning trade only to be slapped back by waves of selling, reflecting investors' views that much more support was needed from the government and the central bank. Japan's Nikkei was among the few bright spots, rising 1.4 percent, while Australia fell 0.5 percent, said the report.

Global commodity prices, including crude oil prices, too, have taken a major knock over the past year or so in the wake of softening Chinese demand, which was the only silver lining in an otherwise sluggish global economy, said analysts