The Telegraph
Since 1st March, 1999
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North Block takes stock of volatility

New Delhi, May 25: The Union finance ministry today asked Securities and Exchange Board of India (Sebi) chief G. . Bajpai to continue the probe into the Black Monday crash which saw the sensex sliding by almost 800 points in the sharpest intraday fall ever.

Bajpai, who joined a long queue of financial sector top brass and industrialists to meet finance minister P. Chidambaram, said, “Sebi will present a report after analysing the trading data.”

Reserve Bank of India (RBI) chief Y. V. Reddy apprised Chidambaram of the price situation when he paid the finance minister a courtesy call. Officials said there are fears that an inordinate increase in oil prices could lead to a huge surge in inflation. Reddy has, however, said oil price hikes had been factored in the RBI’s annual forecast which places inflation at around 5 per cent.

But it was Bajpai’s half-an-hour long meeting with Chidambaram which had North Block officials scurrying around with follow-up work.

The Left parties had accused market manipulators of creating an artificial panic on bourses soon after news spread that Sonia Gandhi would be leading the coalition government. Markets regained hugely by the next day after market regulators stepped up vigil and state-run financial institutions provided buying support.

Bajpai, who claimed his meeting was a courtesy call on the finance minister, felt it was too premature to say anything on what led to the crash as the market watchdog was still “analysing the data”.

Left leader Nilotpal Basu, a member of the last joint parliamentary committee on stock market scams, had also said there were indications that promissory notes had played a role in accentuating the market crash.

Sebi, claiming that it had regained control over the markets after last week’s roller-coaster ride, tried to allay fears of any crisis. “There is no payment crisis. Our markets are among the safest in the world,” it said.

Chidambaram has already asked the finance ministry’s capital markets division to keep a sharp eye on the market as the next few weeks in the run-up to the budget could be crucial. North Block top brass said they had been asked to stay in regular touch with market regulators and economic intelligence gathering units.

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