Former Mamata Loyalists Find Place In New Wbpcc

Union finan- ce minister P Chidambaram has assured the stock broker community that the economy is fundamentally sound and there is no need for panic.

'It is important that foreign institutional investors and domestic investors read the economy the way we are reading it. Foreign exchange reserves are at a comfortable level of nearly $30 billion, inflation rate is at 3.75 per cent, industrial performance is at 8.1 per cent in April-May, FDI (foreign direct investment) levels are comfortably placed and the monsoon has been extremely good. Nearly 90 per cent of the country has received normal to excess rainfall,' he said in Mumbai on Saturday, while inaugurating the nation-wide expansion of Bombay Stock Exchange's on-line trading system.

Stressing on the need to boost domestic savings to infuse life into the capital market and bring back the retail investor, Chidambaram said: 'Our domestic savings are pegged at 25 per cent of the GDP. It is significantly higher than the 5 per cent savings rate prevailing in 1947. However, we lag compared to China, as they save 40 per cent of the GDP. The role of the capital market is significant. Brokers have to assure the retail investor that investment in the capital market will provide them with healthy returns and their rights would be protected.' he added.

The finance minister asked the Securities & Exchange Board of India (Sebi) and the stock exchanges to curtail volatility in the capital market. 'At the beginning of this year the Sensex was at 3,000, at the beginning of this month 4,605 and yesterday it closed at 3900 levels. We do not need a volatility driven by speculative forces. Such roller-coaster rides do not add to the comfort and the growth has to be steady, thereby increasing confidence,' he argued.

Sebi chairman D R Mehta indicated that 468 foreign institutional investors had been registered. 'FIIs have brought in around $8.7 billion through portfolio investments and even when the market trend in the last few trading sessions have been witnessing selling, the net inflow for August was $140 million,' he said.

Bombay Stock Exchange president M G Damani said August had witnessed an erosion in the market capitalisation to the tune of Rs 75,000 crore. He called for the need to clear the J R Verma committee report on the modified carry-forward system.