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| Volatility sweeps Indian markets | |
| (about 2 hours later) | |
| Indian stock markets have suffered fresh volatility amid concerns about plans to curb the flow of foreign investment in shares. | |
| India's main share index, the Sensex, closed down nearly 4% on Thursday, having initially risen to a new all-time high above 19,000. | |
| The index fell 9% at one point on Wednesday on worries about government efforts to contain the rising market. | |
| Ministers said there was no cause for panic but traders warned of turbulence. | |
| The benchmark Sensex index of leading companies closed down 717.43 points or 3.8% at 17,998.39 on Thursday, having earlier risen as much as 2%. | |
| This fall came on top of Wednesday's eventual 1.8% decline in share values. | |
| 'Panic' | 'Panic' |
| "Investors panicked due to the regulatory proposal," said Apurva Shah, a equity market strategist from Prabhudas Lilladher. | "Investors panicked due to the regulatory proposal," said Apurva Shah, a equity market strategist from Prabhudas Lilladher. |
| "We expect sharp volatility in coming days." | "We expect sharp volatility in coming days." |
| Wednesday's fall came after the stock market regulator proposed urgent curbs on the flow of foreign funds into shares, in order to stop the market overheating. | Wednesday's fall came after the stock market regulator proposed urgent curbs on the flow of foreign funds into shares, in order to stop the market overheating. |
| The regulator's recommendation relates to participatory notes - a form of investment used by hedge funds and other foreign investors who are not registered in India. | The regulator's recommendation relates to participatory notes - a form of investment used by hedge funds and other foreign investors who are not registered in India. |
| Analysts say the proposal may be aimed at countering a surge in foreign money that has caused Indian share prices to rise sharply - worrying some policy makers about its potential impact on the broader economy. | Analysts say the proposal may be aimed at countering a surge in foreign money that has caused Indian share prices to rise sharply - worrying some policy makers about its potential impact on the broader economy. |
| There is also a concern that because much of the investment is coming from unregistered firms, those investors could easily pull out, damaging the markets. | There is also a concern that because much of the investment is coming from unregistered firms, those investors could easily pull out, damaging the markets. |
| 'Investment welcome' | 'Investment welcome' |
| Finance minister P Chidambaram said that foreign investment was still welcome and that a ban on the notes was not intended. | Finance minister P Chidambaram said that foreign investment was still welcome and that a ban on the notes was not intended. |
| "But presently it is important to moderate capital flows, which are getting very copious and abundant," he said. | "But presently it is important to moderate capital flows, which are getting very copious and abundant," he said. |
| India is seen by many investors as one of the safest havens among the emerging markets as investors try to tap into one of the world's best-performing economies. | India is seen by many investors as one of the safest havens among the emerging markets as investors try to tap into one of the world's best-performing economies. |
| The rupee has risen more than 11% against the US dollar since the start of the year. | The rupee has risen more than 11% against the US dollar since the start of the year. |