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`Calm and order have returned'

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Genuine long-term investors should stay invested says FM

MR P. CHIDAMBARAM
MR P. CHIDAMBARAM

Our Bureau

New Delhi, May 23

The Finance Minister, Mr P. Chidambaram, on Wednesday promised that the Government, the Securities and Exchange Board of India and other regulators would take necessary steps from time-to-time to ensure that the capital markets remained well regulated.

Stating that India's growth story remained intact, Mr Chidambaram told the Rajya Sabha that calm and order appeared to have returned to the stock market and that his advice to genuine long-term investors was to stay invested.

The Finance Minister was making a statement on the developments in the stock market. He said that the system had stood the test of volatility and that the markets were able to complete settlement of funds and securities smoothly. Both NSE and BSE reported that all market players had met their payment obligations, he said. Events in the global markets, over the last one week, and especially in the commodity markets, had brought sharp volatility in many emerging markets, he added.

India too witnessed considerable volatility as part of these global events, he saidThe Finance Minister said that some people who were over leveraged came under margin pressure and banks had provided adequate liquidity to meet margin requirements. He also said that trading data of Monday confirmed that mutual funds werenet buyers and that foreign institutional investors were overall net buyers with large purchases in the derivatives market.

Mr Chidambaram pointed out that experts have for some time now, had been suggesting that a technical correction of the market was unavoidable. "The correction, however, happened to be more than expected and somewhat disorderly on account of various factors ," he said.

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(This article was published in the Business Line print edition dated May 24, 2006)
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