Mumbai: India’s main share index fell 2.3% on Thursday, its biggest one-day slide in more than six-month, on fears of a widening regulatory crackdown on companies and deepening probe into a telecom corruption scandal.

The government will send notices to telecom firms by the end of this week as part of the investigation into sale of telecoms licences and airwaves cheaply that a government auditor said resulted in a potential $39 billion revenue loss for the government, telecoms minister Kapil Sibal said.

Shares in Reliance Communications , India’s No. 2 mobile operator, fell 5.7% to Rs122.50, their lowest close. Bigger rival Bharti Airtel fell 2.6% to Rs338.60.

The 30-share BSE index shed 2.31%, or 454.12 points, to 19,242.36, its lowest close since 26 November, with all but three components closing in the red.

“People are really concerned and panicked with the corporate governance issues mostly in small and mid-sized companies," said Arun Kejriwal, strategist at research firm KRIS. “There is also fears of liquidity drying up ahead of the holiday season."

Last week, the Securities and Exchange Board of India (Sebi) had barred the founders and related entities of four small firms from trading on the stock exchanges for “fraudulent and unfair" trade practices.

“People are quite circumspect right now," said Ambareesh Baliga, vice president of Karvy Stock Broking. “The overall market mood will remain sluggish and fund flows will slow because of the holiday season."

Foreign funds dumped $93.6 million worth of local shares on Tuesday, after having been net buyers in the six preceding sessions. Still, total foreign fund flows into local shares stand at a record $29.2 billion this year.

Shares in No. 2 lender ICICI Bank shed 4.4% to Rs1,057.20. The stock has fallen 8% in three trading sessions on fears of slowdown in credit offtake after it raised lending rates.

Top lender State Bank of India dropped 4.3%, HDFC Bank ended down 1.8% and mortgage lender Housing Development Finance Corp fell 1.9%. Brokerage HDFC Securities said in a report the margins of most banks were likely to be under pressure in this quarter to 31 December after they hiked deposit rates in the last three months.

Traders said there was also fear that increase in lending rates would crimp credit growth.

Bucking the trend, shares in most export-driven outsourcing companies rose on hopes that US President Barack Obama’s move to extend tax cuts would help the US economy in the near term.

India’s top software services exporters get about half their revenue from the United States. Bellwether Infosys Technologies advanced 0.5%.

In the broader market, losers were nearly 9 times the number of gainers on volume of 394 million shares.

The 50-share NSE index ended down 2.3% at 5,766.50.