Finance minister Pranab Mukherjee allays fears of a payments crisis

The stock markets continued to face downward pressure, the government on Tuesday cited assessments investment bankers "to discuss the fundamentals of the economy were strong enough to handle the situation resulting from the reduction of American credit by Standard and Poor.

While agreeing that there could be volatility in stock markets, Finance Minister, Pranab Mukherjee, said he was confident these would be manageable and capital good inputs in the medium term. He tried to allay fears of a payments crisis due to volatile stock markets. "Some investment banks have improved India (a)" marketweight "(rating). This means that the fundamentals are strong and macroeconomic recovery is moving in a positive direction," he told reporters.

Yesterday, Goldman Sachs upgraded India to "marketweight 'after holding a" weight "rating for more than a year. This is based on a likely improvement in India's macroeconomic situation, low oil prices, attractive valuations actions and initiatives in recent government policy reforms. And Merrill Lynch Bank of America said: "We advise investors to ignore the inevitable talk of India" external vulnerability, "as the world becomes an increasingly more volatile. In our opinion, the (Reserve Bank of India) has enough firepower to fend off infection as any other emerging market. "

Mukherjee said India's economic fundamentals were able to respond to any challenge of lowering U.S. and the crisis in some countries in the euro zone. He said that the reduction has created some problems for India, but the country could handle any situation arising from international developments.

"The challenge is there, but we have the ability to address these ... Together with the efforts of all stakeholders, in particular with the cooperation of the RBI, we will be able to face challenges," he said.

Reference Sensex Bombay Stock Exchange closed down 132 points Tuesday, after recovering from an initial loss of 560 points, which compare well with identified as Asian markets.

Thomas Mathew, Joint Secretary of the capital markets division of the Ministry of Finance said that foreign investors are unlikely to resort to strong sales and good capital flows are expected in the medium term.

He said there could be some volatility in the coming days, but would be manageable. "We expect a strong selling by FII (foreign institutional investors)," he said. He also said that there was no payment problems at all, despite the massive volatility in the stock.