“The stock market is reflecting worldwide developments. In fact, it is really reflecting the developed economies as well as the Asian economies,” he said in a reply in Lok Sabha. “But some volatility is to be expected especially when there is turbulence in the international financial markets,” he said, adding “the stock market is an important indicator, but we should not look at the stock market as sole indicator of India’s economy.”

He said the Sensex only captures the share price movement of 30 stocks and the Nifty captures the share price movements of either 50 or 100 stocks.

Good regulation
The country has a well-established regulatory system in place and it would ensure there is no excessive volatility in the market, he observed.

Conceding there has been a slow down in growth rate of the economy in the second half of 2007-08, the finance minister said the government has taken a number of steps to boost investment and consumption, the two factors that drive India’s growth.

He said while the growth rate has dipped from last year’s 9.6 per cent, the projected 8.5-8.7 per cent growth rate cannot be considered a bad achievement. On appreciation of rupee, he said it has not appreciated to the same extent against the Euro or the Yen.