India's key share index slumped nearly 3 percent on Wednesday, retreating from the previous session's intraday life high, as global markets slid on Federal Reserve talk of more U.S. interest rate rises ahead.
The Bombay index had lost as much as 4.7 percent earlier -- its biggest intraday fall since a 17 percent crash on May 17, 2004. The stock market weakness, coupled with the dollar's strength, took a toll on the rupee, which lost 0.6 percent.
The index fell 2.9 percent to 6,458.84 points, its lowest close since Dec. 23, swinging 292 points between the day's high and low. Twenty-nine of the index's 30 stocks lost ground, with autos, banks and metals feeling the brunt of the sell-off.
"This is a very healthy correction and was long overdue," said Raamdeo Agarwal, managing director at stock broker Motilal Oswal. "People should realise that this is not a one-way street."
The interest rate-sensitive auto and banking sectors fell sharply, while metal stocks were dragged down by a heavy sell-off on the London Metal Exchange overnight.
Hero Honda Motors Ltd., India's top motorbike firm, dropped 7.4 percent. The biggest commercial bank, State Bank of India, lost 5 percent and Hindalco Industries Ltd., the country's top aluminium maker, shed 4 percent.
Compared with a 73 percent leap in 2003, the Bombay index rose just 13 percent in 2004, though that represented a 56 percent rebound from its May 17 low.
The market then started 2005 as it finished last year, racing to a record intraday peak of 6,696.31 points on Tuesday as foreign investors continued to pump money into Asia's fourth-largest economy on hopes of good returns.
Foreign funds moved a net $8.5 billion into Indian shares last year, helping stocks recover from lows in May after the Congress party surprisingly won a national election and formed a government with support from communists wary of economic reforms.
Overseas funds then bought more than $120 million worth of Indian stocks on the first two trading days of 2005, though data for Wednesday will not be available until later on Thursday.
RUPEE AND BONDS EASE
Strong foreign inflows had also buoyed the rupee last year, helping it rise 4.9 percent on top of a 5.2 percent gain in 2003.
But the Indian currency, which hit a 5-year peak on Dec. 31, slipped due to a dollar rebound abroad and expectations that a sharp decline in stock prices would weigh on foreign investment.
The rupee ended at 43.8350/8500 per dollar -- its lowest since Dec. 27 -- down from its previous 43.52/54 close.
Federal bonds eased after a recent rally, hit by the falls in the equity and currency markets as traders digest Tuesday's fresh issues and look forward to more debt sales next week.
The benchmark 10-year yield was at 6.5542 percent, above the previous close of 6.4723 percent.
The Bombay index had lost as much as 4.7 percent earlier -- its biggest intraday fall since a 17 percent crash on May 17, 2004. The stock market weakness, coupled with the dollar's strength, took a toll on the rupee, which lost 0.6 percent.
The index fell 2.9 percent to 6,458.84 points, its lowest close since Dec. 23, swinging 292 points between the day's high and low. Twenty-nine of the index's 30 stocks lost ground, with autos, banks and metals feeling the brunt of the sell-off.
"This is a very healthy correction and was long overdue," said Raamdeo Agarwal, managing director at stock broker Motilal Oswal. "People should realise that this is not a one-way street."
The interest rate-sensitive auto and banking sectors fell sharply, while metal stocks were dragged down by a heavy sell-off on the London Metal Exchange overnight.
Hero Honda Motors Ltd., India's top motorbike firm, dropped 7.4 percent. The biggest commercial bank, State Bank of India, lost 5 percent and Hindalco Industries Ltd., the country's top aluminium maker, shed 4 percent.
Compared with a 73 percent leap in 2003, the Bombay index rose just 13 percent in 2004, though that represented a 56 percent rebound from its May 17 low.
The market then started 2005 as it finished last year, racing to a record intraday peak of 6,696.31 points on Tuesday as foreign investors continued to pump money into Asia's fourth-largest economy on hopes of good returns.
Foreign funds moved a net $8.5 billion into Indian shares last year, helping stocks recover from lows in May after the Congress party surprisingly won a national election and formed a government with support from communists wary of economic reforms.
Overseas funds then bought more than $120 million worth of Indian stocks on the first two trading days of 2005, though data for Wednesday will not be available until later on Thursday.
RUPEE AND BONDS EASE
Strong foreign inflows had also buoyed the rupee last year, helping it rise 4.9 percent on top of a 5.2 percent gain in 2003.
But the Indian currency, which hit a 5-year peak on Dec. 31, slipped due to a dollar rebound abroad and expectations that a sharp decline in stock prices would weigh on foreign investment.
The rupee ended at 43.8350/8500 per dollar -- its lowest since Dec. 27 -- down from its previous 43.52/54 close.
Federal bonds eased after a recent rally, hit by the falls in the equity and currency markets as traders digest Tuesday's fresh issues and look forward to more debt sales next week.
The benchmark 10-year yield was at 6.5542 percent, above the previous close of 6.4723 percent.