Gupta: It will blow over

Calcutta, May 17: The current meltdown on the bourses will be short-lived and the market will bounce back within the next two to three days, feel city-based industrialists and companies.

Reacting to today’s historic fall in sensex, Biswadip Gupta, president, Bengal Chamber of Commerce and Industry, and managing director of Vesuvius India, said this is transitional and will shortly settle down. “There has been panic-selling in all the counters. FIIs have been pulling out. But once the new government announces its policy the sentiments will show some recovery,” he added.

A massive selling pressure from foreign institutional investors (FIIs) in the wake of ‘anti-market’ statements by partners of the Left front, which is supporting the Congress-led government at the Centre, caused havoc on the bourses with share prices witnessing a historic intra-day decline.

The downfall was led by PSU and bank shares on anticipation that the divestment process would get stalled and the decision to bring down the government holding in public sector banks to 33 per cent would be reversed due to opposition from the Left parties.

The Congress has made the right noises, Eveready Industries India Limited executive vice-chairman and managing director Deepak Khaitan said. Moreover, the economic numbers are good and there has been a good monsoon, he said. “The Congress has announced that there will be divestment on a case-to-case basis. This shows the new government’s commitment to take forward the reforms. The current meltdown is temporary,” he added.

However, companies in Calcutta feel that statements made by the Left front partners will drive the FIIs away from the bourses. This was visible last week itself when they sold shares worth over Rs 2,000 crore.

“This has created nervousness among market players and if they don’t stop making such statements, nobody knows the levels to which prices would fall,” said a top-level manager of a steel company.

Indian Chamber of Commerce secretary general Nazib Arif said, “It is a temporary market aberration. The present uncertainty will end once the new government announces its common minimum programme and divestment strategy. Investors will feel comfortable and will make a comeback.”