India denies reports of probe into price-rigging in stock market

  • Business
  • Friday, 23 Sep 2005

NEW DELHI (AP) - India's finance minister said he didn't know of any stock scams and regulators told investors not to panic Friday, denying reports of an investigation into share-rigging a day after prices fell sharply on rumors of a government probe. 

Indian shares rose briefly at the opening Friday after the comments were made, but fell later as investors sold off stocks, betting they would be able to buy at lower prices in the coming days. 

An hour after the market opened, the 30-share benchmark index of the Bombay Stock Exchange, the Sensex, was down 69 points, or 0.8 percent, to 8,152 points. 

On the rival National Stock Exchange, the 50-stock S&P CNX was down 11 points, or 0.4 percent, to 2454 points. 

On Thursday, the Sensex fell 3.1 percent, while S&P CNX declined 3.5 percent, dragged down by rumors of a federal investigation into possible share price manipulation. 

Before the market opened Friday, the chairman of the Securities and Exchange Board of India, M. Damodaran, said "baseless reports'' about a federal investigation and raids on some brokers should be ignored and advised investors "not to panic.'' 

Finance Minister P. Chidambaram, speaking from New York, said: "One should not get unduly worried if the market rises over two or three trading session, or falls in one trading session'' 

"There is no scam ... the market is well-regulated,'' he told India's CNBC-TV18 television station. 

Indian shares have surged nearly 35 percent since April, buoyed by optimism about the country's economic prospects and strong demand from foreign investors.  

The Sensex has hit record highs in recent weeks, prompting many analysts to warn of a possible correction. 

Indian investors lost billions of dollars when the market crashed in 1992 and 2000 due to stock scams. - AP 

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