India's stocks tumbled, shutting down the Bombay Stock Exchange for an hour, and the rupee fell the most in two months after regulators proposed restrictions on investments favored by global hedge funds.The benchmark Sensex index dropped as much as 9.2 percent after the Securities & Exchange Board of India said late yesterday it plans to limit trading by investors who buy shares anonymously, using derivatives known as participatory notes. Record share purchases had driven the Sensex up 38 percent this year to an all-time high and fueled a 12.5 percent gain in the rupee against the dollar.
Finance Minister Chidambaram said the rules were aimed at moderating capital inflows that fueled a "very steep rise'' in stocks. The central bank bought a record $39.9 billion in the eight months through August to curb gains in the rupee that have reduced earnings at exporters including Tata Consultancy Services Ltd., the country's biggest software maker.
The Bombay Stock Exchange Sensitive Index of 30 companies, or Sensex, fell as low as 17,307.90, before closing down 1.76 percent at 18,715.82. ICICI Bank Ltd., India's biggest lender by market value, fell as much as 12.5 percent and closed 3.45 percent lower at 1116.85 rupees. Reliance Industries Ltd., the nation's biggest company, gained 1.59 percent to 2690.3 rupees, rebounding from a 14 percent slump.
The rupee fell as much as 1.6 percent to 39.97 per dollar before trading at 39.55. The currency reached 39.27 on Oct. 11, the highest since February 1998.
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