Chidambaram begins his crash repair, market tests positive

Then, in an hour-long meeting with top brokers where Securities and Exchange Board of India (SEBI) chief GN Bajpai was also present, Chidambaram stressed that reforms would continue and the economy would grow at a healthy rate of 7-8 per cent, subject to fiscal prudence and discipline.

The brokers, in turn, demanded the setting up of a Market Stabilisation Fund (MSF) to counter problems of high volatility and low liquidity, particularly in the light of the unprecedented crash on May 17.

According to them, one of the reasons for the crash was lack of liquidity. If an MSF had been in place, it could have helped in reducing the volatility and provided necessary liqidity to the market, they told the FM.

Emerging from the meeting, they said Chidambaram discussed measures for calming the volatile market scenario and conveyed a serious intent to take the reforms process forward.

‘‘He listened to our issues and I am confident that he will continue with the reforms and fiscal process,’’ said Motilal Oswal, chairman, Motilal Oswal Ltd, who was present at the meeting. ‘‘Investors should be able to get some confidence now,’’ said Ambareesh Baliga, vice president, Karvy Stock Broking Ltd.

Later in the day, the Finance Minister met some of the country’s top bankers, including State Bank of India (SBI) chief AK Purwar and HDFC Bank’s Aditya Puri.

‘‘I owed a visit to Mumbai because it is the financial capital. For obvious reasons, I am not making any detailed statement because Parliament is in session,’’ Chidambaram said in a late-evening press briefing.

‘‘The purpose of the visit is to tell key economic players that reforms will continue, and this must place India on a 7-8 per cent GDP growth path. All these meetings are part of a consultative process for a transparent Budget,’’ he added.

As the FM prepares to meet corporate leaders and foreign fund managers tomorrow, India Inc will expect some more reassurance. In any case, Round One of the FM’s confidence-building interactions seems to have worked.

‘‘We are cautiously optimistic,’’ said Sanjay Sachdev, Chief Executive Officer, IDBI Principal Mutual Fund. ‘‘We expect that the new government will have no problem with foreign direct investment in India.’’

In fact, industrialists are looking forward to meeting the Finance Minister tomorrow. An upbeat Venugopal Dhoot, Chairman, Videocon Group, wants to highlight the smooth going his units have had in West Bengal. ‘‘Now it’s upto the Finance Minister to remove the image that Left parties are against private sector,’’ he said.