New Delhi - India's main share indices plunged by almost 4 per cent on opening Thursday as it became clear that the government would not be bailing out fraud-hit information technology major Satyam Computer.

Satyam shares, which had staged a recovery over the past couple of days on hopes of a government bail-out, plunged by over 30 per cent soon after opening.

Shares of India's fourth-largest software exporter had plunged by 78 per cent last week after its founder Ramalinga Raju revealed a 1.43-billion-dollar accounting fraud.

Raju and two other top officials of Satyam are in judicial custody while various agencies are investigating the fraud. The government has appointed a new board of directors to steer Satyam through the crisis.

"This government is not going to directly or indirectly subsidise wrongdoing and fraud in Satyam," federal Minister of State for Industry Ashwani Kumar was quoted as saying by PTI news agency on Wednesday.

Bombay Stock Exchange's 30-share index Sensex was trading at around 9029 points, about 3.64 per cent down from Wednesday's close after plunging by over 4 per cent in early trading. All 30 Sensex stocks were trading in the negative.

The broader 50-share Nifty of the National Stock Exchange was trading at 2738.15, about 3.43 per cent below its previous close.

Analysts ascribed the marginal recovery in the markets in afternoon trade to a further easing of inflationary pressures revealed in the government's latest figures.

Inflation, linked to a wholesale price index, dropped to 5.24 per cent for the week ended January 3, compared to 5.91 per cent in the previous week. (dpa)