London: Finance Minister P Chidambaram today said that a weakness in Indian stock market was a reflection of global developments, and the domestic economy continues to be strong.
“The Indian market is only reacting to what is happening worldwide especially the US market and the East Asian markets,” Chidambaram told newsmen after inaugurating the London branch of the General Insurance Corporation of India here this morning.
He said, “There is nothing fundamentally wrong with the Indian economy. The results of major corporate houses coming in the third quarters show the profits are rising. That is reflected in an increase in corporate taxes and income taxes.”
Indian stock market has suffered an unprecedented loss in the last seven days. It has tumbled by 4,097.51 points since January 14 due to weak cues from the US and other global markets. However, today it gained 864.13 points to close at 17,594.07, boosted by a rate cut by the US Federal Reserve.
Advising long-term investors to stay calm, Chidambaram said that, “It has happened in the past and it may happen in the future”.
He said, “India continues to be a very attractive market in terms of high returns, and foreign direct investment would continue to come.”
“There are countries with huge deficit and there are countries with fixed exchange rates. Some might face problems as financial situation continues to be volatile.”
On rupee appreciation, the minister said, “I know in some sectors it is causing problems. We are taking steps to help them and we will continue to take steps to lessen the pain. But in the long term, an open economy will allow capital inflow and outflow.”
Source : sify.com