India's main share index fell nearly 2 percent on Thursday after several explosions across London killed a number of people and rattled global financial markets. The benchmark 30-share BSE index fell as much as 2.25 percent before closing at 7,145.13 points, 1.95 percent off an all-time closing high of 7,287.6 the previous day.
"Our market was weak right from the start today due to high oil prices and profit taking. The London explosion news caused more sell off," said Arun Kejriwal, director at independent research firm KRIS.
The blasts, which paralysed London's transport network, occurred one day after London was awarded the 2012 Olympics and coincide with the start of a G8 summit in Scotland, which will also be attended by India's prime minister, Manmohan Singh.
Indian shares had hit several record highs in recent weeks as foreign funds poured into India, drawn by its economic growth.
A net $5 billion of foreign money has flowed into India's stock market this year and the BSE share index is up 10 percent.
"The market needed a correction and the news of explosion just helped it," said Shashi Krishnan, chief executive of Cholamandalam Mutual Fund. "How is it going to affect Indian markets and fund inflow, one still needs clarity."