New Delhi - India's main stock index crashed by over 9 per cent in the early hours of trading Wednesday after the national stock market regulatory body announced measures to curb capital inflows. Soon after opening the Sensex, a 30-share-sensitive index of the Bombay Stock Exchange, tumbled to 17,307.90 - down 1,743.96 points or 9.15 per cent from the pervious day's close. All 30 shares of the Sensex were trading in the red, IANS news agency reported.
It later recouped to rise to 18,236.61 and stabilized at about 4.28 per cent down around noon.
This was one of the steepest-ever drops and it triggered circuit breakers resulting in stopping trading for one hour, a National Stock Exchange official was quoted as saying.
The Sensex tumble is being attributed to urgent curbs on the inflow of foreign funds into the Indian share market market proposed by the market regulatory authority, the Securities and Exchange Board of India (SEBI).
SEBI on Tuesday announced proposals to clamp down on participatory notes from foreign funds in a bid to curb excessive speculation which had resulted in regular sharp rises of some key indices and a over-heating of the market.
"The proposals have been drawn up after long discussions between RBI (India's federal bank), SEBI and the government and are aimed at moderating capital inflows," India's Finance Minister P Chidambaram said.
"This will be good in the long term for investors and the Indian economy," he said.
