NEW DELHI: Confidence has returned to India's share market after it plunged to a 14-month low on the back of the latest global financial turmoil, the country's finance minister said Wednesday.
India's benchmark Sensex index of 30 leading shares soared nearly 400 points in early trade as part of a global upturn after the US Federal Reserve pledged to hold interest rates near zero for at least two years.
"One thing is certain -- confidence has come back in respect of Indian markets," Finance Minister Pranab Mukherjee said, a day after Indian shares hit their lowest level since June 2010 on worries about international debt.
"In a couple of days it (the market) will be stable," Mukherjee said as the Bombay Stock Exchange's Sensex ended the day up 272.60 points or 1.62 percent at 17,130.51 points.
Mukherjee said Standard & Poor's downgrade late last week of the US credit rating and heightened concern about the debt crisis in Europe could have some impact on India's capital and trade flows.
But "the (central) Reserve Bank of India and the Ministry of Finance are working together in close cooperation to ensure that whatever steps are needed are taken" to offset the effect on India, he told reporters in New Delhi.
The latest financial upheaval has come as India is battling nearly double-digit inflation. Recent economic data has shown the economy weakening under the impact of the longest stretch of monetary tightening in a decade.
Mukherjee said he is sticking by his forecast that Asia's third-largest economy will be able to match this financial year the 8.5 percent growth it notched up in the previous 12 months to March 2011.
Copyright AFP (Agence France-Presse), 2011
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