"The Indian market is only reacting to what is happening worldwide especially the US market and the East Asian markets," Chidambaram told newsmen after inaugurating the London branch of the General Insurance Corporation of India at London on Wednesday.

He said "there is nothing fundamentally wrong with the Indian economy. The results of major corporate houses coming in the third quarters show the profits are rising. That is reflected in an increase in corporate taxes and income taxes."

Indian stock market has suffered an unprecedented loss in the last seven days. It has tumbled by 4,097.51 points since 14th January due to weak cues from the US and other global markets.

However, on Wednesday it gained 864.13 points to close at 17,594.07, boosted by a rate cut by the US Federal Reserve.

Advising long-term investors to stay calm, Chidambaram said that "it has happened in the past and it may happen in the future".

He said "India continues to be a very attractive market in terms of high returns, and foreign direct investment would continue to come."

"There are countries with huge deficit and there are countries with fixed exchange rates. Some might face problems as financial situation continues to be volatile."

On rupee appreciation, the minister said "I know in some sectors it is causing problems. We are taking steps to help them and we will continue to take steps to lessen the pain. But in the long term, an open economy will allow capital inflow and outflow."

Chidambaram said the financial services in India required more reforms.

"We recognise more reforms are required. A Bill is before Parliament, and I am confident it will be passed facilitating the raising of FDI limit from 26 to 49 percent," he said.

"I am confident that we will find a way to pass the bill. Whatever stumbling blocks are there will be overcome and our financial sector will equal the best in the world," he added.

The country has come a long way in the sphere of banking and a large number of players in life insurance and non-life insurance are operating there, the minister said.

Kamalesh Sharma, Indian High Commissioner to the UK; Lord Karan Bilimoria, Founder Chairman of Cobra Beers; Lord Swraj Paul, NRI Industrialist and British Ambassador for Overseas Business; and Angad Paul, CEO of Caparo Group were also present at the inauguration function. - DDNEWS