New Delhi: Finance Minister P Chidambaram today attributed the sharp fall in the stock market to the plunge in the Asian markets, but said it was not a cause for concern.
“So what? Markets will rise and markets will fall,” he told PTI, when asked was it a matter of concern.
“When this government took over, the benchmark index was near 4,400 and today it is on either side of 15,000,” the Finance Minister said against the backdrop of the over 430 points fall in the benchmark Sensex in morning trade.
The Finance Minister’s comments assume importance in the wake of market plunging from its peak of 15,868 by about a 1,100 points in a fortnight.
Asked to comment on the three major falls the market suffered in the recent past, including today, Chidambaram said: “That’s because the Asian markets are down. We are part of the globalised economy today. If there is a downturn in one market, it will affect other markets.”
On the influence of US sub-prime credit market on Indian stocks, Chidambaram said there was virtually no impact in India, as there was no lending at sub-prime rates here.
The Sensex had plunged by 542 points on July 24, followed by another 615 points fall on August 1 on reports of credit crunch in the US market - a crisis triggered by weaknesses in the sub-prime lending market there.
“Sub-prime rates in India are given to the highest rated industrial group... You and I don’t get sub-prime rates. Somebody like NTPC may get a sub-prime rate or Tatas... I am only speculating.
“Whereas in the US, bulk of the market was lending at sub-prime rates.... our bankers are pretty shrewd, I don’t think they extend sub-prime rates to many,” Chidambaram said commenting on the practice of extending credit below prime rates.
The country’s stock market barometer recouped nearly half of the intra-day loss and limited the fall to 235 points.