Fundamentals strong, market crash due to FII pull-out: FM
November, 24th 2011
The government today asserted that India's growth and fundamentals are strong and attributed the bloodbath in the stock markets to global factors. "India's growth fundamentals are strong and they look more attractive in a world (which is ) confronting problems," Finance Minister Pranab Mukherjee said, adding that FII investments have been in the positive territory in October and November.
Mukherjee's statement comes in the backdrop of a sharp decline in Indian stock markets. The BSE benchmark Sensex today crashed 587 points in intra-day trade, before recovering to close 365 points lower at 15,699.97.
Earlier in the day, he had said that continuous withdrawal of funds by foreign investors and depreciation of the rupee are the major factors for crash of stock markets. "Markets have crashed because of continuous withdrawal of (funds by) FIIs. There is still uncertainty prevailing in the Eurozone. Rupee depreciation also has adverse impact. All these cumulative effects are there," he said. In the past six trading sessions, foreign institutional investors (FIIs) have withdrawn USD 623 million (Rs 3,214 crore) from the equity markets.
During October and till November 22, FIIs have invested USD 634 million and USD 214 million, respectively. However, the FIIs today pulled out over USD 160 million from stock markets. Referring to the decline in the value of rupee, he said, "RBI is closely monitoring the situation and will do the needful as required." Value of the Indian Rupee had touched an all-time low of 52.73 against the US Dollar yesterday, but recovered today to trade around 52.12 per dollar.