India Inc says economy's fundamentals are strong, market crash temporary

As stock exchanges suffered their worst-ever single-day fall, India Inc on Monday said the volatility is short-lived and the markets are expected to stabilise as the country's economy rests on strong fundamentals, comments that may soothe the nerves of jittery investors.

In its biggest-ever single-day drop in absolute terms, the BSE Sensex crashed over 1,941 points and the NSE Nifty tumbled 538 points as no let-up in coronavirus spread and massive crude oil plunge fuelled global recession fears.

Besides, both indices also marked their biggest intra-day fall of all-time.

Assocham Secretary General Deepak Sood said the panic in the financial markets owing to a massive fall in the crude oil prices does not affect India's macroeconomic picture and on the contrary, low fuel prices would help the country.

"India being a large importer of crude oil, fall in prices would be a positive for the Indian economy although there is a global sentimental downside. Going forward, low prices of crude can be a demand driver for India, from the automobile industry to consumption as inflation would be tamed. Lower inflation would also help further in cutting the interest rates," said Sood.

PHD Chamber of Commerce and Industry President D K Aggarwal said the volatility in the rupee and stock markets is short-lived and primarily driven by the spread of coronavirus in many countries.

"The markets are expected to stabilise, as the fundamentals of the Indian economy are strong enough to withstand the external shocks on the back of robust economic reforms undertaken by the government during the last many years," said Aggarwal.

The rupee is currently hovering around 74 against a dollar, we are hopeful that the rupee will strengthen and stabilise, he added.

The rupee on Monday slipped past the 74-level against the US dollar to settle at 74.14 (provisional), down 27 paise, tracking heavy selling in the domestic equity market amid rising concerns of an economic slowdown due to the coronavirus outbreak.