Prime Minister Narendra Modi will meet top businessmen at his residence on Tuesday, a day after the rupee hit a two-year low and the Sensex plunged below 25,000 on bad economic news from China and on market talk that the US Federal Reserve may soon raise rates.
Among those expected at 7, Race Course Road are the heads of India’s biggest corporate houses — Ambani brothers Mukesh and Anil, Tata Group’s Cyrus Mistry, Aditya Birla Group’s Kumar Mangalam Birla, Mahindra & Mahindra’s Anand Mahindra, Essar’s Shashi Ruia, and Adani Group’s Gautam Adani.
For company, they may have Reserve Bank governor Raghuram Rajan, who everyone has been trying to persuade to cut interest rates. An RBI spokesperson said Rajan was already in Delhi.
The heads of the two biggest banks – State Bank of India’s Arundhati Bhattacharya and ICICI Bank’s Chanda Kochhar – are also expected. The three industry chambers will be represented by their presidents -- Sumit Mazumder of CII, Jyotsna Suri of FICCI and Rana Kapoor of Assocham.
“The PM wants to discuss if India has an opportunity in this global crisis, and how our markets can regain investors’ confidence,” said Mazumder.
On Monday, the benchmark equity index Sensex closed at a 15-month low of 24,893.81 points, down 308 points or about 1.2%. The wider NSE Nifty ended 96 points or about 1.3% lower 7,558.80.
The crisis in the Indian markets was mostly on fears that an expected US rate hike could trigger a foreign investor exodus. A modest improvement in recent US jobs data — an indicator that the world’s largest economy is perking up — fuelled talk the US Federal Reserve might go ahead with raising rates.
If that happens, foreign investors will likely offload their India positions and rush to the US markets as a strong dollar would be more rewarding than emerging markets.
Bad news from China in the form of a lower economic growth forecast also rattled investors already spooked by estimates of a poor monsoon that could hurt the economy and impact the RBI’s decision on an interest rate cut.
The sentiment affected the rupee also as the FII (foreign institutional investor) sell-off and importers buying dollars for making payments drove down the Indian currency by 36 paise to 66.82 to a dollar.
The government has been of the view that India should take advantage of the global turbulence and look at how to convert it into an opportunity.
This is PM Modi's second high-level interaction with industry captains since he assumed office. As many has 27 business leaders, bankers and economists have been invited for the meeting.
Finance secretary RP Watal held a review meeting on Monday with all four finance ministry secretaries and chief economic adviser Arvind Subramanian to discuss pending policy issues.
Watal will represent the bureaucracy at Tuesday’s meeting, along with Shaktikanta Das, secretary to the department of economic affairs, revenue secretary Hasmukh Adhia, commerce secretary Rita Teaotia. NITI Aayog vice chairman Arvind Panagariya is also expected to attend.