SC Bhave, chairman of the Indian markets regulator Securities and Exchange Board of India (Sebi), on Tuesday said the Indian equities markets were resilient and there was no need for panic.
"The clearing system is capable of dealing with stock fluctuations and markets are under watch," he told reporters in New Delhi.
Earlier, Finance Minister P. Chidambaram had a meeting with Bhave to assess the market situation.
"If evidence is found against any firm circumventing short selling norms, severest action will be taken," the Sebi chief said to calm market jitters.
He also said that Sebi was monitoring the situation closely and there was absolutely no need for unwarranted worry.
The hurriedly called press briefing came in the wake of news that the US House of Representatives had rejected the Bush Administration's $700 billion bailout plan Monday.
The Sebi chief's attempts to talk up the market appeared to calm investor nerves to some extent as equities markets after opening very weak recovered somewhat but were still in the red.