The Bombay Stock Exchange (BSE) Sensex fell 2.7 per cent on Friday, caught in a global sell-off as fears of a credit squeeze gripped world markets, but fund managers said they expected losses to be limited because domestic growth remained strong.
"We are following the global markets but I don't see a steep correction happening," said Sandeep Neema at JM Financial Mutual Fund, who manages about $400 million in Indian stocks.
At 11:15 am, the main BSE-30 share index was down 2.69 per cent or 406.09 points at 14,694.06, with all the components in the red. The index hit a low of 14,570.89, its lowest since June 29.
The benchmark has fallen 7.4 per cent from a record 15,868.85 hit on July 24.
"A lot of people who were sitting on the fence with huge bags of cash, will start entering the market now," Neema said. "As a fund manager I am looking to buy, as fundamentals of our market have not changed, and good first quarter earnings are good example of that," Neema said.
But KK Mital, vice president at Escorts Mutual Fund, said global concerns on credit woes and vanishing liquidity were likely to slowly trickle down to the Indian market.
"The concerns are building up and our local banks may suffer because of the subprime problems," Mital said.
"There are concerns of Japanese yen carry trade and on global liquidity, which may impact our market in the long run," he said.
Asia stocks were spooked -- many fell more than 3 per cent -- and major central banks tried to soothe nerves by increasing availability of funds to money markets.
The MSCI's measure of Asia Pacific stocks excluding Japan slid 3.6 per cent.
On Thursday European indices and later Wall Street's blue-chip Dow fell, after France's biggest listed bank, BNP Paribas, froze $2.2 billion worth of funds, citing the US subprime mortgage sector woes.
India's number-one private bank, ICICI Bank, was down 3.6 per cent at Rs 858, its lowest since mid-May, while top mortgage firm Housing Development Finance Corp fell 4.7 per cent to Rs 1,921.1.
Top private firm Reliance Industries Ltd lost 2.2 per cent to Rs 1,802, after rising 1.8 per cent on Thursday.
In the broader market, losers outpaced gainers 1,762 to 540 on volume of 175 million shares.
The 50-share NSE index fell 3.03 per cent to 4,269.90.
Elsewhere in the region, Karachi's 100-share index was down 0.12 per cent at 13,165.79. It rose as high as 13,359.52 in early trade after President Pervez Musharraf on Thursday rejected calls to declare emergency power.
Colombo's All-Share index eased 0.4 per cent at 2,425.13.
Stocks On The Move
Ahluwalia Contracts India Ltd gained 1.3 per cent to Rs 556.50 after the construction firm said it had received an order worth Rs 6.88 billion from Emaar MGF, for part construction of the 2010 Commonwealth Games village complex.
Jai Corp Ltd rose by its daily limit of 5 percent to 5,580 rupees after its board approved the issue of one bonus share for each held and the company's plans to enter into infrastructure business.
Main Top 3 By Volume
* IFCI Ltd. on volume of 8.2 million shares.
* Reliance Natural Resources Ltd. on 6 million shares.
* United Breweries Ltd. on 2.7 million shares.