FIs consider steps to prop market, prevent losses

New Delhi, Sept 17: Financial institutions (FI), including the Unit Trust of India (UTI), are considering various measures to prop up the market and prevent themselves from heavy losses in the wake of turmoil prevailing in the Indian financial sector after terrorist attacks in the US.

“We are buying (equities),” UTI chairman M Damodaran said on Monday, when asked about the fund’s position after the fall in the Sensex to about 2645 points during the day’s trading.
UTI is likely to witness a fall in its asset values due to the falling market condition.

Mr Damodaran, however, reassured UTI investors saying “everything is fine with us. US-64 investors need not panic and redeem their units now on the fears of a lower net asset value, which will be announced in January, 2002.”

The UTI chief also expressed confidence saying the Sensex would cross the 4,000 mark some day to push up the NAV of US-64.
The Sensex nose dived to almost 180 points on Monday during the intraday trade to fall to 2644.56 from Friday’s close of 2830 points, mainly on account of the heavy selling by foreign institutional investors.

A top official of a leading PSU bank said the “situation is grave” and the Reserve Bank of India (RBI) should consider a rate cut now to infuse liquidity in the market. “Some of the banks have reduced deposit rates. Lending rates are also low. RBI should now consider a rate cut,” he said.

General Insurance Corporation (GIC) foresees a rise in the reinsurance rate in India as international players have raised their premiums.

“We don’t accept much of the reinsurance business of the US market. But due to the rise in reinsurance rates by international players, we might have to raise the rates here also in future,” GIC managing director (MD) PC Ghosh said.

Global insurers foresee the claims to rise to about $15-$20 billion after the terrorist attacks in the US on September 11.

Life Insurance Corporation MD NC Sharma said the insurer was not affected by the events in US but there might be some claims from non-resident Indians.

A State Bank of India official said the bank’s branches in the US were safe and were operating normally. “The New York branch of SBI is situated quite far from the World Trade Center and has remained untouched,” he said.

— PTI