Growth fundamentals strong: Pranab

Asserting that India's growth fundamentals are strong and look more attractive in a world beset with problems, Finance Minister Pranab Mukherjee on Wednesday ascribed the massacre in the stock markets to a number of global factors.

“India's growth fundamentals are strong and they look more attractive in a world confronting problems,” said a Finance Ministry statement quoting Mr. Mukherjee.

The official statement came in the wake of a bloodbath on the domestic bourses with the Bombay Stock Exchange sensitive index (Sensex) witnessing a 587-point free fall in intra-day trade before recovering some lost ground to close 365 points lower at 15,699.97. The National Stock Exchange's Nifty also breached the psychological barrier of 4,700 to touch 4,640.95 and ended the day's trading at its two-year low at 4,706.45.

The Finance Minister's statement also sought to stress that despite the global uncertainties, investments by foreign institutional investors (FIIs) have been in “positive territory in October ($634 million) and November as of Tuesday ($213 million).”

Earlier in the day, however, Mr. Mukherjee had maintained that continuous withdrawal of funds by FIIs along with the eurozone crisis and the depreciation of the rupee were the major factors responsible for the stock market crash.

“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 had said.

As per market data, FIIs had invested $ 634 million in October and brought in another $ 214 million during the following month till November 22. In the past six trading sessions, however, they withdrew $ 623 million from the stock market. The pull-out during Wednesday's trading totalled over $160 million.

Commenting on the sharp slide of the Indian currency, Mr. Mukherjee said the volatility in the rupee was also keeping investors nervous even as it recovered from a low of 52.73 and traded at 52.12 against the U.S. greenback. “[The] RBI is closely monitoring the current rupee situation” and the Finance Minister is sure that it “will do the needful, as required”, the statement said.