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India's Economy Strong; Stock Market Falls

Saturday May 20, 7:43 am ET

India's Economy Strong Despite Record Fall in Stock Market, Finance Minister Says

NEW DELHI (AP) -- India's finance minister said Saturday that the fundamentals of the country's economy remain strong despite a record fall in the stock market this past week.

"The fundamentals of the economy haven't changed," Finance Minister P. Chidambaram told reporters.


Reports that the Indian government was planning to increase taxes on foreign institutional investors helped drive the Sensex down.

"The decline in the stock market has been due to many factors like a fall in metal prices, the firming up of interest rates overseas and the attractiveness of other markets," Chidambaram said.

"We accept this fact that the market will rise and fall ... but it is unfortunate that uninformed reports on sensitive matters have also hurt the market," he said.

In the current fiscal year which began April 1, India's central bank estimates that the country's gross domestic product will grow by between 7.5 percent and 8 percent.

The finance minister also said India expects good monsoon rains this year, which would benefit the agriculture sector. India's monsoon season begins in June and ends in October.

In my opinion, this downturn in the Indian market is mainly on speculation, with a few other factors (From the article: Reports that the Indian government was planning to increase taxes on foreign institutional investors helped drive the Sensex down.). But, none of the downturn really had to do with India, at least that is what I see. What I'm saying is that we might have a good value opportunity now, or soon, as you can see with some Indian companies/funds (India Fund has been hit hard). I see this as an opportunity because the finance minister said "The fundamentals of the economy haven't changed."

I'd be curious to hear other thoughts, opinions, objections... You get the idea. ;)


David K
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