Indian shares surge 4.99 percent on relief for foreign investors

MUMBAI, Oct 23, 2007 (AFP) – Indian shares surged 4.99 percent Tuesday as investors cheered a move that eased concerns about a proposed regulatory change previously seen as soon limiting purchases by overseas buyers, dealers said. The Mumbai stock exchange Sensex index rose 878.85 points or 4.99 percent to 18,492.84 after the regulator allowed foreign investors to continue to invest in the stock market through participatory notes for now, they said.

The notes allow foreign investors to buy Indian shares anonymously.

The Securities and Exchange Board of India last Tuesday issued a proposal to soon curb the use of the notes by anonymous buyers, triggering a nine percent slide in the stock market during trading the following day.

Foreign investors have helped drive a stock market boom in India, pumping in about 18 billion dollars this year alone. Global bank Lehman Brothers has said participatory notes account for about 51 percent of foreign inflows.

“The near-term concerns of a regulatory move to limit capital controls vanished,” said Ved Prakash Chaturvedi, a managing director with Tata Mutual Fund.

The proposed new regulations for participatory notes are expected to be formalised Thursday. The regulators d