Bombay trade starts again

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The Independent Online
India's largest stock market, the Bombay Stock Exchange, will reopen for trade today after an embarrassing three-day shutdown triggered by a broker's default.

Bhagirat Merchant, president of the exchange, said: "The crisis has been resolved, and we have received all the money for the settlement. Payments will be made tomorrow, when the exchange opens."

Trading ground to a halt on Monday after a broker's default on payments amounting to 135m rupees (£2.7 million).

After three days of infighting amongst brokers, in which they refused the exchange's ultimatum to cover their losses, a solution was finally worked out yesterday.

The closure of the exchange for three days over such a relatively minor default was described yesterday as a "temporary setback" by emerging market fund managers in London. India has been one of the most popular destinations for the flood of retail investor money that has flowed into emerging markets in the past two years.

A Foreign and Colonial emerging markets spokesman, Sam Mahtani, said that the closure would have a temporary impact on market sentiment, but the company's 12-month forecast for India was positive. Foreign and Colonial has a $130m fund that invests in India.

Lazards insisted the event would be a positive development in the long term. "The Bombay exchange will have to clean up its act," a spokeswoman said. "In the short term, we expect the market to fall by 50 points for each day it remains closed. But the fundamentals are strong, it's only that the system is not able to cope with it. In fact, this is a great opportunity to buy," she said.