The Hindu : Front Page : Steps to infuse more liquidity

Online edition of India's National Newspaper
Tuesday, Oct 14, 2008
ePaper | Mobile/PDA Version

Front Page

Front Page

Steps to infuse more liquidity

Special Correspondent

Chidambaram assures investors

NEW DELHI: In a move aimed at ushering in the “confidence factor” in a free-falling stock market and pre-empting further tanking, Finance Minister P. Chidambaram on Monday promised a slew of concerted measures to infuse more liquidity and advised investors to take “informed” decisions, without haste or panic.

Reading out a statement at a news conference here about 15 minutes before trading on the bourses began, Mr. Chidambaram said:

“We [RBI, SEBI and the government] are working on more measures that will infuse liquidity, make credit intermediation smoother, and increase the confidence of depositors and investors. We hope to be able to announce them shortly.

“Our banks are ready and willing to provide credit. Suitable advisories are being issued to the banks … We are watching the situation carefully and we will respond swiftly according to the needs of the situation.”

Mr. Chidambaram pointed out that with authorities in the U.S., the U.K., Europe and Australia announcing a number of financial stabilisation measures over the weekend, the capital markets in Australia and three of the East Asian countries “opened on a bright note this [Monday] morning.” Goading investors to stem the mayhem on the domestic bourses, he said: “I expect that our capital market will also take its cue from these positive developments.”

The Minister’s appeal, aired live by TV channels succeeded in talking up the market. For, not only did the Bombay Stock Exchange 30-share Sensex open 495 points higher, as compared to Friday’s closing, it ended the day’s trading with a gain of about 781 points, at over 11,309.

In fact, apart from the positive global sentiment, aiding in the robust relief rally after a five-day slump in a row last week was Mr. Chidambaram’s reassuring statement for both bank depositors and stock market investors alike. “We must remain confident and respond to the situation in a cool and mature manner. We must banish fear.”

For players on the stock market, Mr. Chidambaram’s advice to investors was that they must take informed decisions. “Before you sell, you must remember that for every seller there is a buyer. You must ask yourself why the buyer is buying in these times of perceived uncertainty and, therefore, ask yourself the further question whether there is a need to act in haste or in panic. There is no reason at all to act in haste or to give room for panic,” he said.

Related stories:

G-20 vows to stabilise markets

Of bailouts, public sell-outs and media cop outs

Economic orthodoxy was built on superstition

Coping with the crisis

Rationale for imposing CRR

RBI cuts cash reserve ratio

CRR and the chart horror

RBI, government infuse liquidity

RBI cuts CRR by additional 1 pc

BJP seeks "long-term" bailout plan for economic crisis

SEBI says no evidence of illegal activity