No liquidity crisis in stock exchanges: FM

New Delhi, May 22: Intervening after the Sensex crashed by more than 1,000 points in the morning intra-day trading, Finance Minister P Chidambaram today assured investors that there was no cause for panic and there was ample liquidity in the stock exchanges.

Recovery followed appeals by Mr Chidambaram in New Delhi and SEBI Chairman M Damodaran in Mumbai that there was no cause for panic and that the fears of a liquidity crisis were unfounded.

Mr Chidambaram reiterated that the fundamentals of the economy were strong-- nearly 163 billion dollars of reserves, inflation at less than four per cent, buoyancy in GDP growth rate and manufacturing growing at more than 9 per cent.

The Finance Minister said many of the FIIs were long term players in the Indian bourses, implying that their selling behaviour should not send panic signals.

In the last few trading sessions while FIIs have been net sellers, Mutual Funds were net buyers.

Trading was halted at 1155 hrs, after the index fell 10 per cent.

The National Stock Exchange or Nifty stopped trading after going down about 180 points at 3,065.20.

The market opened strongly in the morning, recording over 200 points increase, but the slide started within minutes.

The Sensex has lost more than 2,000 points in the last few trading sessions.

UNI