BOMBAY, May 22 (UPI) -- The Indian stock market recorded its biggest fall in prices in a single day Monday, although it had partially recovered by the close of trading.
The recovery, The Hindu newspaper said Tuesday, was aided by official assurances on the health of the economy and Indian companies and the reliability of the market regulatory system.
"Even as the stocks plummeted, spreading nervousness everywhere, the authorities suspended trading for an hour, after which the stock prices started recovering," said a stock broker. He said the worst slump in the 30-share sensitive index saw the index fall by 11,170 points over the course of the day, though it later recovered 654 points, closing with a loss of 457 points.
Monday's slump came on top of a sharp fall recorded last weekend in tune with the trends in the world's gold, metals and stock markets. A local news report said that in addition to global trends impacting India's capital market, which since 1991 has opened itself to foreign institutional funds in an increasingly integrating world economy, a circular issued by the Central Board of Direct Taxes with possible implications on the taxation of market players, domestic or foreign, caused the plunge.
Market observers noted the crisis coincided with the second anniversary of the federal government, whose ascent to power was similarly accompanied by nervous selling and a price slump, only to be reversed within days.
Finance Minister P. Chidambaram attempted to bolster investor confidence, saying brokers were under margin pressure, and that enough money was available to meet margin calls.
