News Source: Times Of India |Image: Wikipedia
The BSE Sensex slumped 1,600 points on Monday. This is the biggest fall since 2009. The rupee weakened from 64 per dollar to 66.74, a fall of over 4 percent since August 2011 when China announced the devaluation of its yuan currency. The selloff in markets was triggered by a global meltdown in risk assets.
Nifty also tanked 491 points, mirroring the trends seen on the BSE. The market was witnessing all-round heavy selling across realty, power, oil and gas, bankex, auto, metal, capital goods and IT sectors
Ascribing THE STOCK MARKET crash to global turbulence, the finance minister said the governement and RBI were carefully watching the situation. He even hinted to the external factors and said that the turbulence was momentary, and the markets would settle soon.
Adding further, he said ” our response at this stage is very clear. We have to strengthen our own economy. We have embarked upon a path for one and quarter years… even in the midst of global slowdown India should emerge as one of the fastest growing economies in the world. India’s inflation and fiscal deficit is under control,” he said.
RBI governor, Raghuram Rajan like Jaitley too assuaged fears citing strong macroeconomic fundamentals of the country.
” I wish to reassure the markets that our macroeconomic factors are under control as the economy is in a much better position than other economies. The upee has further strenghtened against euro and yen,” Rajan told the national summit organised by the IBA and Ficci.
The depreciation in the rupee hits foreign investors and diminishes their returns. Analysts say foreign funds have started selling shares aggressively because of the rupee fall. On Friday they sold shares worth Rs 2,340 crore, which is the biggest selling since April 2015.
To soothe investor sentiments, he said the central bank will not hesitate to use reserves to reduce the volatility in the currency.