New Delhi, Sep 30 (UNI) Decisive statements by Finance Minister P Chidmabaram and SEBI Chief C B Bhave as also RBI as well as ICICI Bank Managing Director and CEO K V Kamath lifted the gloom on the Indian stock markets, which defied global cues and rose 264 points today after a hefty fall of 506.43 points yesterday.
Early in the day Finance Minister P Chidmabaram was closeted in a meeting in North Block with Finance Secretary Arun Ramanathan, Secretary In the Department of Economic Affairs Ashok Chawla, Mr Bhave and Joint Secretary Capital Markets K B Krishnan.
Coming out of the meeting, Mr Bhave said there was no reason to panic, adding that the market regulator was monitoring the situation closely.
Mr Bhave assured that SEBI would take action if entities were found breaking short sale rules. He said the Indian markets were resilient and did not visualise short selling by institutions.
The market settlement system was sound and gave an assurance that no change in the rules governing short-selling was expected.
Sources say the meeting was of high import as a critical juncture Mr Bhave was in the capital, instead of Mumbai.
Immediately afterwards, Mr Chidambaram told reporters that there was nothing to worry about the Indian market. "We are suffering the consequences of turbulence around the world. Basically, Indian market is a sound, attractive and well regulated." He said that if regulations need to be tightened then the government would not be found wanting.
Within minutes of these statement, markets recovered losses as the BSE Sensex was down by 197 points. After highly voltaile trade, the BSE SENSEX ended up by 261.20 points.
After droping 442.20 points in early trade on rejection of 700 billion dollar bailout package by US lawmakers, the BSE settled at 12,860.45 on the index.
Similarly, the wide-based National Stock Exchange index Nifty shot up by 71.15 points, or 1.85 per cent, at 3,921.20.
The rally was led by top private sector lender ICICI Bank, the biggest gainer among Sensex scrips at 8.42 per cent, a day after it was hammered on rumours on its financial health.
The Reserve Bank of India (RBI) came in defence of ICICI Bank, saying the bank has sufficient liquidity to meet the requirements of its depositors.
The Central Bank's statement came in response to reports that depositors were withdrawing cash at its ATMs and branches following rumours regarding the financial strength of ICICI Bank.
RBI said it was monitoring the developments and has arranged to provide adequate cash to ICICI Bank to meet the demands of its customers at its branches and ATMs.
The ICICI Bank and its subsidiary banks abroad are well capitalised, the RBI said.
In a statement, Mr Kamath reiterated that the bank's financial position was sound.
He termed rumours regarding the financial position of the company as ''baseless and malicious.
The European Markets fell as much as two per cent in early trading, Japan's Nikkei closed 4.12 per cent lower after the deep losses on Wall Street.
Asian markets, however, recovered. Hong Kong's Hang Seng index was 0.9 per cent higher, while South Korea KOSPI pared losses to end down 0.6 per cent.
The Indian Markets broke the trend and recovered as fast as they fell.
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