Govt rules out controls on FII capital as Sensex tanks 3.97%, rupee breaches 62 intra-day & gold surges the most in two years

The stock market was pummelled on Friday and had its worst day in nearly two years, on concerns over the falling rupee and rumours about a move to stop foreign institutional investors (FIIs) from taking their capital out of the country. Fears about an imminent tapering of the US stimulus also played a role.

The government was quick in allaying the fears of market players. Terming the fall a knee-jerk reaction by brokers, the finance ministry said it had no intention to impose capital controls and denied market rumours of a proposal to increase margin money on short-selling of shares.

Finance Minister P Chidambaram said in New Delhi that jobs data in the US did not impact India and there was a need for calm to be restored in the markets. “We have taken a number of measures. Let us wait for what the first quarter growth numbers are,” Chidambaram told reporters, adding the fundamentals of the economy had not changed.

Though emerging markets, in general, have been volatile on fears that the US might stop its quantitative easing programme (QE3), India was the worst-performing of the Asian markets on Friday, with all other indices falling less than one per cent.

For more visit: Business Standard

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