Crumbling market finds harbour in PC’s assurance

The market, which saw trading suspended for one hour after its fall of over 10 per cent triggered the circuit breaker, plunged further when trading resumed at 1055 hrs.

But Chidambaram's statement that the Indian economy was strong and that the market should not allow worries of the western world to overwhelm it reversed the sentiment.

The 30-share Sensex, which fell to by 2272.93 points in intra-day trading, was still trading in negative territory at around 16,701.34, down 5.13 per cent compared to Monday’s close of 17,605.35 points.

"We had anticipated that markets will open today on a downward note and may hit the circuit breaker," Chidambaram said in New Delhi after exchange authorities suspended trading due to a fall in stock prices minutes after the bourses opened.

The circuit breaker is activated when the market moves 10 per cent, either up or down.

"I am assured by RBI and all the banks that enough liquidity will be provided to brokers and market players. Liquidity will not be an issue," Chidambaram said.

Ahead of his visit to Davos for the World Economic Forum, he exuded confidence that investors would return to market as fundamentals of the economy were strong.

"Worries of western world should not be allowed to overwhelm us. Our economy is very different from some economies of developed countries. Our economy is a strong economy and corporate sector is very strong," he said.

The market had tanked 1,408 points at close of trading on Monday, as international markets went into a tailspin on fears of a possible recession in the US - the world's largest economy.

To a query, Chidambaram said there is no ground for sentiments to be negative in the long run as fundamentals of the Indian economy are strong.

"We will grow at nine per cent this year. Even Rangarajan Committee (Prime Minister's Economic Advisory Council) has said we will grow at 8.5 per cent next year," the Finance Minister said.

Banks have reported that investments in the economy are running very high as the demand for credit is strong, he said.

"RBI has stated that investment in pipeline is also strong. Fundamentals (of the economy) are very sound.

Corporate profits are high and corporate income tax is at an all-time high," he said.

When asked whether institutions would be advised to buy stocks at this moment, Chidambaram said, "We are not advising institutions to do this or that. Institutions are good judge of what are valuations today."

However, he said analysts and advisers have advised investors to stay calm.