Thaindian News

New Delhi, Nov 23 (IANS) The Indian currency and the stock markets are unlikely to stabilise unless the Eurozone recovers from the financial mess, Finance Minister Pranab Mukherjee said Wednesday.

“Unless the Eurozone stabilise, there is a difficulty for Indian markets to stabilise,” Mukherjee told reporters here.

The finance minister said withdrawals by foreign institutional investors (FIIs) and weakness of the rupee led to the recent slump in Indian stock markets.

“Both in the month of September and October, a substantial quantum of money has been withdrawn by FIIs,” Mukherjee told reporters after a benchmark index of the Indian equities markets slumped to its lowest level in intra-day trade in almost two years.

The 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) closed 2.27 percent down at 15,699.97 points Wednesday after slumping to the near two-year low of 15,478.69 points in the intra-day.

Mukherjee said weakness in rupee was making investors nervous and leading to the sell-off in the markets.

The Indian rupee slumped to a record low of 52.73 against the US dollar Tuesday. The rupee has weakened almost 15 percent in the last four months.

“Depreciation of rupee also has an impact on the markets,” the finance minister said.

He said the Reserve Bank of India (RBI) was closely monitoring the current rupee situation and would take the necessary action whenever needed.

However, Mukherjee emphasised that India continued to be an attractive investment destination as its economic fundamentals were strong and better than most other countries.

The finance minister pointed out that despite the recent sell off, FII investment in India has been positive. Total FII inflow was $634 million in October. The foreign institutional investors have pumped in $213 million in November so far.

Although the flow of overseas investment in India equities markets has slowed, it continue to be positive.