Indian share prices plunged 2.63 percent Wednesday, the sharpest one-day decline in nearly two years, as overseas funds sold software companies. The fall in software shares came just ahead of earnings results due on Friday for India's second largest software exporter Infosys Technologies, dealers said.
The benchmark 30-share Sensex index closed down 306.82 points at 11,355.73.
It was the sharpest fall since May 17, 2004 when the markets turned nervous after the Congress party government came to power.
"The markets were in an overbought position in previous months. Selling pressure was strong as funds took the view that corporate earnings performance had been discounted," said Manoj Kakaiya, dealer with ULJK Securities.
"We expect trading to be rangebound in days ahead. It would be early to determine whether there is a sharp correction ahead," he said.
Losers led gainers 1,546 to 983 on turnover of 53.93 billion rupees (1.2 billion dollars).
Infosys shares fell 111.9 rupees or 3.5 percent to 3,075 on overseas fund selling.
India's largest software exporter, Tata Consultancy Services, dropped 112.5 rupees or 5.94 percent to 1,783.1. Its results are due next week.
Investors said the drop in software stocks was linked to perceived high valuations after the market reached record levels last week.
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