Mumbai/ Chennai, Mar 19 () : DMK pulling out its 5 ministers from UPA ministry has sent stock markets in a tizzy.
At the time of writing this report, stock markets have dropped over 1% in mid-morning after investors turned jittery due to political uncertainty and UPA being reduced to a minority. 18 DMK MPs have been asked to wait till March 21 and if the words `genocide’ and `war crimes’ are included in a resolution to be passed in Parliament then to carry on otherwise they would go to President with the letter withdrawing support.
Sensex was down at 19,105 and Nifty was dipping to 5,776. The slide can be stopped only if the Congress agrees to DMK’s demand. Finance Minister P Chidambaram told media and to assure the markets that there is no crisis and that the UPA was stable. He added that M Karunanidhi had left the door open saying the decision could be reviewed if their demand was met.
FM said that finance appropriation bill was passed in Lok Sabha and today it has come before Rajya Sabha but it was not taken up due to business being stalled.
The mood in Anna Arivalyam was upbeat and a retreat from its decision did not seem possible. The support of Samajwadivadi Party is vital now and its President Mulayam Singh is demanding an apology from Union Minister Beni Prasad (who called Mulayam as friend of terrorist) and if it does not happen, then it would rethink on alliance.
A tottering UPA is bad for economic reforms and could make foreign investors pull out. The threat of an early poll could put every bureaucratic decision on hold and thereby bring to halt the steps mentioned in the budget to spur growth.
Public sector companies and the oil and gas companies’ shares were the biggest losers. Private banks like HDFC, ICICI and Axis are already losing after the Cobragate expose and RBI coming in to put more restrictions. These would affect the profitability of the banks.