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Last Updated: Monday, 22 May 2006, 10:55 GMT 11:55 UK
Indian stocks rebound after pause
Bombay Stock Broker
It was the biggest intra-day drop in the BSE's history
Indian shares have rebounded after a drop of more than 10% prompted the Bombay Stock Exchange (BSE) to suspend trading for an hour.

The BSE's benchmark 30-share Sensex index closed 456.84 points, or 4.2%, lower at 10,481.77.

Earlier it had lost 1,111.71 points, its biggest intra-day drop, amid heavy selling by domestic and foreign funds.

Investors said they were worried that recent record gains had come too fast to be justified by the profit outlook.

Record run

Monday's slump comes after the BSE fell by nearly 7% last Thursday and as stock markets were under pressure worldwide.

On Monday, trading was automatically suspended for an hour on both the Bombay Stock Exchange and the rival National Stock Exchange, which also fell by 10%.

What has happened is a certain amount of nervousness in the market
P Chidambaram
Indian Finance Minister

It is the first time in three months that the Sensex has fallen below the 10,000-mark, and the first time that trading has been halted since May 2004 when the Communist-supported Congress Party alliance won general elections.

India's Finance Minister, Palaniappan Chidambaram, played down Monday's drop and said it was expected after last week's global stock market slides.

"What has happened is a certain amount of nervousness in the market. My advice to retail investors is to stay in the market," he told journalists in Delhi.

This year has seen the Sensex surging through the 10,000 points barrier in February and the 12,000 barrier in April.

Foreign investors have been pumping money into Indian companies, keen to take a share of its fast-growing economy.

They spent a record $10.7bn (5.7bn) on Indian shares last year, encouraging Indian savers to push more of their money into equities.


SEE ALSO:
The small investors fuelling boom
10 Feb 06 |  South Asia
Indian shares hit historic high
06 Feb 06 |  Business
Strong growth for Indian economy
30 Nov 05 |  Business
Sharp rise in India's growth rate
30 Sep 05 |  Business


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