Attributing the stock market crash to global turbulence, Finance Minister Arun Jaitley today said the government and RBI were watching the situation and hoped that things will stabilise once the transient impact is over.
Financial markets are in turmoil as a result of external factors and they should soon settle down, Finance Minister Jaitley said. The Sensex fell over 5 per cent or nearly 1,500 points in its third biggest fall in history while the rupee fell to 66.67/dollar. The market witnessed all-round heavy selling across realty, power, oil&gas, bankex, auto, metal, capital goods and IT sectors.
He spoke after a huge selloff in Chinese stocks following a recent devaluation of its yuan currency sent the Indian rupee to its lowest level since Sept. 2013.
India’s benchmark BSE index plunged more than 4 percent to its lowest since Oct. 2014 amid falls in blue chips such as Larsen & Toubro.
The devaluation of the Chinese yuan currency may have a transient impact on India, he further added.
China’s yuan devaluation, which comes on top of a slowdown in Asia’s largest economy, is hurting several global economies.
The Indian rupee fell to as low as 66.58 per dollar, its lowest since Sept. 2013, as Asian markets reeled under fears of a China-led global economic slowdown.
Watch video: Sensex crashes most in seven years, but will the slide continue?’
Jaitley further sought to calm the market nerves by saying that the Indian economy is reviving and the current global market turmoil will have transient impact on India.
Jaitley also said that all the concerned authorities including the government and Reserve Bank “are watching the situation very closely and conscious of the responsibility, as what is to be done.”
As far as India is concerned, the minister 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.”
Observing that the domestic indicators were extremely positive, Jaitley said, “once these transient trends are over, markets particularly in India will settle down… they will restore back.”
(With PTI inputs)