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Indian Stock Markets Crash on Political Fears - 2004-05-17


In India, stock markets have crashed following fears that leftist parties, which will provide crucial support to a new Congress-led government, may stall economic reforms. The Congress Party and its allies won recent parliamentary elections.

India's stock markets recorded their biggest-ever single-day fall of more than 15 percent. Investors panicked that leftist parties may influence the economic agenda set by a Congress Party-led government.

Trading was suspended for several hours.

Investors fear that leftist parties might stall a new government's market-friendly policies, such as privatization of state-owned firms.

Congress Party leaders are urging investors to remain calm, and say the party is committed to economic reform.

"We can assure there should not be any panic, investment climate will be improved," said Senior Congress leader Pranab Mukherjee.

Leftist parties are indicating that they will not join a Congress-led coalition government, but will support it from the outside.

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