India's main share index has fallen to a one-month low on fears that a corporate accounting scandal may prompt foreign investors to withdraw funds.

On Wednesday, chairman Ramalinga Raju admitted that the firm's accounts had been falsified.

The Sensex index ended down nearly 2% at 9,406.47.

Satyam shares were down 40% after falling as much as 70% during the day.

India's stock market regulator, the Securities and Exchange Board of India, has started an investigation to examine the trading in Satyam stock.

Analysts say there are concerns more scandals could emerge in the wake of the Satyam case, and this could scare investors further.

"People are now cautious about what is right and what is wrong in companies' accounts. One has to be careful," said Gajendra Nagpal, chief executive of Unicon Financial.

Satyam had been seen as one of India's key IT firms and an important exporter, while Mr Raju, its founder, was highly regarded as an entrepreneur.

In his letter, Mr Raju said he would subject himself to the laws of the land and face the consequences.

He said that neither he nor the managing director had taken any money from the company and had not benefited from the false accounting.

He added that no other board member had been aware of the situation the firm was in.

SATYAM FACTS