Indian exchanges halt as stocks plunge

By This Is Money
Updated: 11:50 EDT, 22 May 2006

INDIA'S main stock exchanges halted trading this morning after shares fell more than 10%.

The plunge will further unnerve investors in the West after more than a week of falling share prices and volatility in the UK and US. Many UK investors have also backed Indian-focused funds in recent months.

The 30-share benchmark Bombay Stock Exchange index fell 10% to 9826.9, falling below 10,000 for the first time in three months. Trading resumed later and the market eventually closed down 456.8 points - or 4% - at 10,481.8. However, the slide comes after a 7% tumble on Thursday and a 4% fall on Friday last week.

The sell-off will be worrying for thousands of small investors in the UK who have ploughed savings into riskier Asian markets.

Strong economic performance in India and China has attracted not only money from existing UK-based funds focused on Far East and Asian markets but has also encouraged fund managers to launch new Oeics and investment trusts focused on those regions.

Much has also been made of the 'Brics' countries as a group - Brazil, Russia, India and China - with investment house Allianz launching a new Brics fund last month. Fidelity FundsNetwork, one of the UK's largest fund supermarkets, said sales of funds in the global emerging markets sector rose 131% in 2005. Only the specialist sector saw demand rising faster.

Shares in the New India Investment Trust, run by Aberdeen Asset Management, has fallen nearly 19% over the past month. Today, it was down 10½p to 104½p in early trading. The JP Morgan Indian Investment Trust was down 17¼p at 212p.