Indian shares plunged to their lowest close in a month on Wednesday on worries about funds drying up in the market amid a series of large share issues.
The 30-share Mumbai index fell two percent to 5,618.15 points - its fifth losing session in six. Volume was thin at 95 million shares, with losers outnumbering gainers two to one.
Wednesday's decline was led by state-run firms who will see large chunks of their equity sold by the government in the next few weeks. Investors also sold cement, steel and auto stocks, which had led a small bounce on Tuesday.
"Investors are looking to sell now and buy these issues at a discount," Pioneer Intermediaries analyst Sandeep Shenoy said. "There is also some nervousness ahead of the ONGC issue, because that will suck out a lot of liquidity from the market."
The government will sell more than 142 million shares in Oil and Natural Gas Corp in the first week of March, the largest issue in Indian stock market history. ONGC shares slipped six percent to 670.25 rupees.
The sell-offs have led to fears of a liquidity crunch in a market already nervous about elections expected in April-May.
Investor response has been rather tepid to offers of Indian Petrochemicals Corporation Ltd, oil retailer IBP Ltd and computer maintenance firm CMC Ltd.
IPCL shed two percent to 185.85 rupees and IBP fell 2.5 percent to 666 rupees on Wednesday.
Shares of software services company Patni Computer Systems made a weak debut on Wednesday, rising to only 233.20 rupees from an initial public offering price of 230 rupees.