`Capital mkt reflects potential of economy'

The upsurge in the capital markets is a reflection of the current potential of the economy and "all players are behaving responsibly," union finance minister P Chidambaram said today.

"I understand the BSE 30 index has peaked today, and this is a reflection of potential of the economy which is expected to do better this fiscal compared to last year," Chidambaram said at the launch of the tax information network.

The first quarter results of corporates are also encouraging, he said, but cautioned investors not to show undue exuberance. "Market is a place where there will be speculative activity and investors' response should be measured to the rise and fall in the market."

On the interest rate scenario, the minister said there was enough liquidity in the market and RBI continues to absorb large amounts of money through reverse repo.

On India's response to revaluation of  yuan, Chidambaram said: "We do not think it will have a major impact on India," and added that there is no change in the foreign exchange management policy.