Sensex plunge 5.78% to two-year lows

Sensex plunge 5.78% to two-year lows

Mumbai: Shares plunged 5.78% on Monday to close at two-year lows amid concerns that the global credit crunch will trigger more heavy foreign fund outflows, dealers said.

The BSE benchmark 30-share Sensex index fell 724.62 points or 5.78% to 11,801.7, its lowest close since September 2006.

“The markets were nervous on concerns of further overseas fund outflows. We could however see a small bounce-back in coming days," said Harendra Kumar, head of research at Centrum Broking.

As of Monday’s close, Indian shares had lost over 41% for the year on overseas fund outflows in excess of nine billion dollars.

During the same period last year, overseas funds bought $13.62 billion worth of Indian equities, which had driven the Sensex up more than 41% in 2007.

The US government last week cleared a plan to spend $700 billion on a bailout package aimed at easing pressure on the economy. Investors were unsure, however, whether bad news emerging from the US financial markets was over.