Reliance Power is run by Anil Ambani
Shares in power plant builder Reliance Power, which was India's biggest stock market flotation slumped 17% on debut.
They were priced at 450 rupees ($11.54; £5.82), but fell sharply during its first day on the Bombay stock exchange.
Analysts are concerned Reliance Power's shares were overvalued after growing concerns about the effect of the global credit crisis.
The company's shares sold out in sixty seconds when they were offered for sale to investors in January.
Reliance Power plans to build more than a dozen power plants over the next 10 years to meet the increasing energy demands of India's fast growing economy.
Reliance's billionaire chairman Anil Ambani dismissed claims the shares were overvalued, saying: "The potential of India's power sector remains strong."
One broker called the valuation "outrageous", while Angel Broking's Girish Solanki said: "The valuations must be seen in conjunction with the fact that currently Reliance Power has hardly any capacity which is operating."
Reliance's disappointing opening comes less than a week after property developer Emaar MGF Land postponed its Indian flotation, citing stockmarket uncertainty.
Reliance Power's fall affected India's main Sensex index, which closed down 4.8% at 16,631.
There were a record number of share listings in India in 2007, but concerns about the global credit crisis are believed to be hitting investor confidence.