India's stock market suffers biggest crash in years

Posted in Other | 18-May-04 | Source: The Independent (UK)

India's stock market crashed today in one of the biggest falls in years, prompting regulators to suspend trading as investors remained wary about the economic policies of the incoming communist-supported government in New Delhi.

The benchmark index of the Bombay Stock Exchange, the Sensex, opened sharply lower and tumbled further to 4516.6 points, in an 11-per-cent drop in the first 20 minutes of trading.

The crash - which brokers said was one of the biggest ever - forced the stock market regulator to halt trading at stock exchanges across the country.

The plummet came despite a warning issued by the Securities and Exchange Board of India (SEBI) asking stock exchanges to be "extraordinarily watchful of any unusual movements in the market and report to SEBI immediately".

Brokers said the volatility in the market would continue until the new government's policies, especially those on privatisation of state-run companies, are made clear.

The market dived on fears that the Congress party, set to form a new government after ousting the ruling National Democratic Alliance in national elections last week, may slow down privatisation of state-run companies and undo market-friendly policies to appease the leftists, whose support is crucial for a parliamentary majority.