The Hindu Business Line : Chidambaramspeak trims market indices fall

The Union Finance Minister, Mr P. Chidambaram’s statement on Tuesday that investors should not allow worries of the Western world to overwhelm them, coupled with some value-based buying by domestic institutions in late afternoon, saw the stock market trim losses even as the BSE Sensex shed about 875 points today.

Mr Chidambaram’s sentiment-improving statement on the strong fundamentals of the Indian economy came soon after trading was halted for one-hour in the wake of Sensex tanking by more than 11 per cent as the market opened.

Resume trading

“We had anticipated that the market will open today on a downward note and may hit the circuit breaker. But I think there will be new beginning at 10.55 a.m. when the market resumes trading. There is no reason at all to allow the worries of Western world to overwhelm us. Our economy is very different from developed economies that are facing some stress,” Mr Chidambaram told reporters here at North Block.

But when the markets reopened, the slide continued after a small recovery following Mr Chidambaram’s statement. By mid afternoon, the Sensex hit the day’s low of 15,332.42 after which some value buying by domestic institutions and other market participants helped the Sensex stage a pullback of over 1,400 points before closing at 16,729.94, a fall of 875.41 points over the Monday’s close of 17,605.35.

‘Stay calm’

On whether the Finance Ministry was planning to advise domestic institutions and insurance companies to resort to buying shares in the current situation, Mr Chidambaram made it clear that he was not advising them on any action.

“We are not advising institutions to do this or that. Institutions are best judges of what valuations are today,” he said. Mr Chidambaram also expressed confidence that investors would return to the market. “I hope all advisors and analysts would advise investors to stay calm and stay invested. Investors should not be led by market rumours or unwarranted apprehensions,” he said, adding that the economy would grow close to 9 per cent this fiscal.

The Finance Minister also said that he has been assured by the Reserve Bank of India and banks that enough liquidity would be provided to brokers and market participants. “Liquidity will not be an issue,” he noted.

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