Markets end sharply higher led by bank, CG, telecom stks

30 September 2008

Markets witnessed smart pullback rally and that got strengthened after Finance Minister and RBI clarifications on our present banking and financial system.

Benchmark indices had opened sharply lower due to steep fall in US markets, as US House of Representatives defeated the USD 700 billion bailout plan in a 205-228 vote but had managed to recover that loss immediately in early trade itself, as if it seemed like markets got factored in that news. Both indices remained strong through the day since then. Smart recovery in European markets and positive Dow futures have helped out markets a bit.

Finance Minister P Chidambaram feels that the (current) regulations are adequate and the (present) situation is monitored. "Indian banking and financial system is well-capitalised. We will tweak regulations only if need arises."  The Finance Minister also said that we will be greatly helped if a bailout package is quickly approved by the US Congress because we will not suffer any collateral damage.

Chidambaram believes that more Foreign Institutional Investors (FIIs) will invest as India is an attractive destination.

Prime Minister, Manmohan Singh also said that the India is not to remain insulated by US financial turmoil.

The Reserve Bank of India (RBI) has also given clarification on the ICICI Bank, India's second largest bank by assets. He said, "ICICI Bank has sufficient liquidity to meet depositors' needs. The central bank has arranged enough cash for ICICI Bank to meet ATM withdrawals. "The bank's foreign arms are well capitalised. It is monitoring developments in ICICI Bank."