Public sector banks, insurance companies and mutual funds are ramping up their exposure in the capital markets with one eye on value buying and the other on softening the bear grip on the Indian stock markets."We are responsible market players, so we have to act. We are increasing our capital market exposure," the chairman and managing director of a large public sector bank told Business Standard.A finance ministry official made it clear that no "specific directives or instructions" were issued to banks and FIs to ramp up market operations. "If they have money and mind, they will put it in the stock market," he said.Another finance ministry official said that public sector banks and financial institutions were encouraged to purchase as much as equities as possible, not engage in panic sales and show leniency towards brokers.Public sector entities in the market were also asked not to engage in sale of securities deposited by brokers for margin requirements as part of their internal "stop loss" thresholds.The idea is to not take any steps that would cause a liquidity crisis for brokers, which can lead to severe consequences for the markets. Finance Minister P Chidambaram said earlier in the day that there would be no liquidity crisis. Speaking to reporters outside his office, he said: "I am assured by RBI and all the banks that enough liquidity will be provided to brokers and market players. Liquidity will not be an issue."
