NEW DELHI, Sept 30: India’s finance minister rushed on Tuesday to assure jittery investors that the country’s stock market was “sound” amid fears that the global financial crisis could broaden.

“There’s nothing to worry about the Indian market,” Finance Minister Palaniappan Chidambaram told reporters in New Delhi after US lawmakers rejected a 700-billion-dollar bailout for Wall Street banks.

Indian shares clawed their way back into positive territory on Tuesday, closing up 2.1 per cent, on investor hopes that the bailout would ultimately be approved after stocks slid over 3.5 per cent earlier in the day.

Indian shares closed up 264.68 points at 12,860.43.

Despite the close, India’s stock market has plunged by nearly 40 per cent this year, after a five-year bull run, as risk-averse overseas investors have dumped Indian shares and fled to perceived safe havens like government bonds.

“We’re suffering the consequences of turbulence around the world. The Indian market is a sound, attractive and well regulated market,” Chidambaram said.

But he voiced concern about rejection of the bailout by the US House of Representatives and said he hoped legislators would pass it swiftly.

“We’ll be greatly helped if a bailout package is quickly approved by the US Congress,” he said, adding, “It’s agreed by everyone a bailout is necessary.”

Earlier, Asia’s third-largest economy insisted it would largely escape fallout from the US-led financial turmoil thanks to its still mainly insulated economy.

But lately, policymakers have changed their tune, with the government’s Economic Advisory Council warning no country can “expect to emerge unscathed.”

The credit crunch and a recession in the United States, India’s main export market, could push down Indian growth to 7.5 per cent or lower in this financial year to March 2009, economists say. The economy grew by nine per cent last year.

The Congress-led government, which faces general elections by May 2009, is monitoring events “round-the-clock,” Chidambaram said, adding “regulations in place are adequate. But if the regulations have to be tweaked, we will do so.”

Chidambaram also said all Indian banks were “well-capitalised and regulated” and “no Indian depositor need be apprehensive.” His comments came after some depositors with Indian bank ICICI the country’s second largest were reported starting to pull out money.—AFP