Amid stock market indices breaching psychological levels and rupee touching nine month low, Finance Minister P. Chidambaram has said that there is no need for any kind of nervousness.
His statement came after benchmark BSE S&P Sensex slipped below 20,000 and NSE Nifty below 6,000 levels during intra-day trade on Thursday.
At the same time, rupee dropped below 56 level during trade.
One of the key reasons for all these falls was a statement by Federal Reserve Chairman Ben Bernanke in which he had talked about scaling back of stimulus with improvement in economic conditions.
“We have been looking at what’s been happening in the market. We think that the Federal Reserve Chairman Bernanke’s statement has been misunderstood or misinterpreted. If you look at the statement carefully he has clearly indicated that he will continue with quantitative easing in the foreseeable future, about $85 billion a month or so,” said Chidambaram while addressing a hurriedly called press conference.
‘Copious flows’
He also mentioned that quantitative easing is continuing in Japan as in Europe. There have been no change whatsoever and the flows into India during May have been extremely copious, he added. The foreign inflow in first 22 days of May is around $5 billion.
“Yes there is some disappointment with the numbers that are coming out of China and there is some ambiguity about whether the quantitative easing programme in Japan will run into any difficulty. But these are factors that are peculiar to the China market and the Japan market.
“They have no relevance at all to the situation in India,” he clarified.
Quoting recent numbers, the Finance Minister said headline inflation and retail inflation for agriculture labours have come down.
“I am looking forward to June and second quarter with greater confidence and the Indian markets should read the situation correctly rather than be influenced by something elsewhere,” he advised.