Financial community is happy with the new setup

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Mumbai: Action was expected by the markets and the members of the financial services community after the horrendous terrorist attack on Mumbai, the financial capital of the country. And the government’s move to have finance minister P Chidambaram take over as the home minister and the Prime Minister taking over the finance ministry has largely been welcomed by the community. However, some reckon that things could have been better. But, nobody is complaining at the moment.

“Overseas investors needed some signal that the Indian authorities are taking some action and this move is, therefore, in the right direction.” says Rashesh Shah, chairman and CEO, Edelweiss Capital. He reckons that the investors needed to see some action and the action has come through and, therefore, this was a positive move. “Manmohan Singh is the father of liberlisation and the market knows him and is comfortable with him handling the portfolio,” Rashesh Shah adds. Capital outflows have been a big concern for the markets and also the economy at the moment.

Dharmesh Shah, head of equities, Enam Securities, a prominent stock broker, also sees this as a positive move. “We are comfortable with Manmohan Singh, rather than having some new person coming in. There should be a positive mood in the market.”

Some FIIs were also positive as they see that the chain of liberalisation being maintained. The also see Chidambaram as a person who takes action. “We can see him taking stern action and also preempting things as he has the grasp and the experience,” says an analyst with an overseas investor.

At the same time, there are others who see this as a mere political move to send signals across the market and feel there would be no major impact. “If this move was not taken, there would have been insane selling seen on the markets,” says a trader. This move will provide some assurance.

In 2008, the scale of capital outflows from the market has been a big concern at $ 13.5 billion till November, against an inflow of $17 billion in 2007. The GDP growth rate for the first half of the year is 7.8%, down from 9.2% at the same time last year. The real concern is the slowdown in industrial growth. As per RBI figures, corporates raised only $1.1 billion as loans from overseas markets in October, compared with $ 2.8 billion in September.