New Delhi - The collapse of major Wall Street firms is likely to result in a tightening of liquidity, adverse impact on the banking sector and a slowdown for information-technology firms that serve customers in financial sectors, analysts said Wednesday.

The Reserve Bank of India, which had net foreign reserves of 288.8 billion dollars in the week ending September 5, has already taken measures to support the rupee which rose by 60 paisa against the dollar on Wednesday.

The central bank also barred Lehman's India subsidiary from remitting money to its parent company.

But with falling global oil prices, India's industrial growth rate of about 7 per cent and the strong fundamentals of the Indian economy so far, analysts say foreign funds will continue to come in to the country.

ICICI Bank, India's second largest, lost more than 4 per cent in share value Wednesday, but said its investments linked with Lehman were less than .01 per cent of total investments, and it had already made provisions to cover the losses.

"There is panic and turmoil in the overseas markets. We will see at the end of this quarter whether to include this component of provisioning in our balance sheet," ICICI Bank chief financial officer Chanda Kochhar said.

Information Technology firms like Satyam and Tata Consultancy Services, which have Merrill Lynch and AIG as major customers, are also expected to see a near-term decrease in business contracts.

"Certain crisis does create a frenzy effect and its impact will be assessed in the next couple of weeks," India's Commerce and Industry Minister Kamal Nath told reporters on Tuesday.

Nath said the US slowdown would affect the global economy including India, which was expecting 40 billion dollars of foreign direct investments in 2008-09.

Nath said the exposure of Asian banks to the collapsed firms was low. He said that reflected sound business practices in Asia, while he criticized the US banking sector and its regulators.

"Those who preached to us about best practices have not helped their own financial sector," Nath said.

There was also apprehension about possible job cuts in the India operations of Lehman Brothers, Merrill Lynch and AIG. And India's top business schools were starting to worry that students recruited last year may be losing their jobs even before they start working.

About 25 to 30 per cent of students from the top five business schools go into investment banking, many at Wall Street and London-based firms.

"In an increasingly interlinked global economy, India cannot remain immune to the US credit crisis," Mumbai-based analyst RS Sharma said.

But he suggested the impact would be moderate because of the cautious approach of the country's policy planners and calibrated regulation of the financial market. The central bank has raised interest rates several times over the past six months in its efforts to control inflation.

Key benchmark indices of the Indian share market opened higher on Wednesday, boosted by the US Federal Reserve's bailout package for AIG, but slipped soon after opening.

The Bombay Stock Exchange's 30-share Sensex was down by 1.47 per cent while the broader 50-share Nifty of the National Stock Exchange slipped by 1.03 per cent, but both recovered somewhat by midday.

The NSE's banking sector, however, was down by more than 2 per cent. (dpa)