MUMBAI (AFP) -- Indian share prices tumbled as much as 4.79 percent in intraday trading Tuesday in tune with other Asian bourses as foreign funds shunned emerging markets, dealers said.

They said the fall could continue in coming days as liquidity dries up and foreign investors remain reluctant to fuel buying.

The benchmark 30-share Sensex index hit its lowest level since December 27, 2005, plunging 454 points or 4.79 percent to 9,022.15 before recovering slightly.

At 0730 GMT, the market was down 410.05 points or 4.33 percent to 9,066.10.

Global funds had sparked a steady rally on the Sensex for almost two years that led the index to a record high close of 12,612.38 on May 10.

But the Sensex has shed almost 30 percent since the record close despite a slew of impressive economic data including a growth rate of 8.4 percent for the fiscal year ended March, the fastest after China.

Investors said a surprise quarter percentage point rate hike to 5.75 percent by the Reserve Bank of India (RBI) on June 8 to stem inflation, led to concern of a slowing economy.

As well, the prospect of higher interest rates in the United States has attracted capital away from India.

"The possibility of another Fed rate hike in June and a resultant US market downturn could mean higher overseas fund outflows," said Vasudev Joshi, with global brokerage firm Man Financial-Sify Securities.

"The market has the potential to revert to 8,500 levels," he said in a note to clients.

The next U.S. Federal open market committee meeting to review monetary policy is scheduled for June 28.

The market has been volatile in the past month with severe swings including a record 5.5 percent gain posted Friday as domestic mutual funds came into the market. But dealers said the local mutual funds have also turned bearish.

"Domestic funds, until recently aggressive equity buyers, have booked profits in June. This has left Indian markets without any support," said a dealer with a state-run development bank.

Domestic funds were net sellers of 14.1 billion rupees (306 million dollars) of Indian equities so far in June, after investing 110.13 billion rupees (2.39 billion dollars) in April and May.

Before the past month of volatility, the Sensex had gained more than 34 percent on sustained overseas fund buying. In 2005, foreign funds pumped in 10.7 billion dollars into Indian equities and more than 4.0 billion dollars until May 10.

In May however, foreign funds ended up as net sellers of 1.6 billion dollars in Indian equities as weak global metal prices pushed them to pull out of emerging markets like India, Brazil and Russia.

Dealers also said rising crude oil prices and a lack of economic reforms by the Congress party-led coalition government will act as a cap on the market and they expect trade to be volatile. "The Indian markets will remain volatile in the near-term," Credit Lyonnais said in its latest report on the country. "This would be on account of waning global risk appetite, a reversal in domestic funds net buying and RBI tightening."