The finance ministry has ruled out taking measures to curb the sudden inflow of foreign capital in the economy as of now, a protectionist stance that countries such as Brazil have taken. Finance secretary Ashok Chawla today said that the sudden surge in foreign capital inflows, powered by the initial recovery in the global economy, is not a cause for concern at present and no specific action is required to arrest it.

The stock markets responded positively to the cue, with the BSE Sensex gaining 409 points on Wednesday and the Nifty closing above the 5,000 mark. Led by Reliance Industries, Infosys Technologies and metal stocks, the 30-share BSE Sensex closed up 409.04 points at 16,849.60, taking its gains so far in November to 6 per cent. The 50-share NSE index closed 2.5 per cent higher at 5,003.95. It closed above 5,000 for the first time since October 21. Software companies rose after Nasscom said the industry was expected to grow 4-7 per cent in the current fiscal year and return to growth of more than 10 per cent next year.

Foreign Institutional Investors’ (FIIs) inflows into the securities markets have turned positive after being hit by the global meltdown last fiscal. FIIs have bought stocks worth about Rs 75,000 crore this fiscal so far, after taking out around Rs 37,520 crore from the Indian stock markets a year ago. “As of now, it is not a cause for concern... We don’t see any need for any specific action in this regard,” Ashok Chawla said at the 3rd ICRIER Inwent annual conference in Delhi . Increase in foreign money inflow has led to the rupee appreciating 8.24 per cent against the dollar this fiscal to date, creating worry lines for exporters who have already been hit by weak demand in the West for their goods.

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