Stock market fall: FM sings no worry note

Finance Minister P Chidambaram said the stock market plunge on Monday morning was not a cause for worry and banking shares, which led the overall decline, would re-adjust on their good profitability.

Pointing out that banking stocks fell because of the hike in cash reserve ratio by the Reserve Bank of India, he told reporters that the central bank's move was aimed at moderating credit.

"Inflation is unacceptably high. It should be below five per cent and towards four per cent," he said, adding more measures would be taken to curb inflation.

Inflation stood at 5.30 per cent during the week ended November 25 against 5.45

per cent during the previous week.

The Sensex tumbled by 537.76 points to 13,261.73 at 1 pm as almost all index-related stocks, particularly banking shares, moved in negative zone.

Bankex fell by 6.5 per cent. "There is no need to worry. Stock markets are at their highs. Bank stocks are falling because of CRR hike," he said.

The RBI had last week increased CRR, the amount of assets that all banks must park with the central bank, by 50 basis points to absorb Rs 13,500 crore (Rs 135 billion) from the system.

Sensex crashes