New Delhi - Indian equities gained 6 per cent and were trading strong Monday as Finance Minister P Chidambaram insisted fundamentals of the Indian economy were strong.

"This is a time of uncertainty. Yet in a time of uncertainty, some facts cannot and ought not to be ignored," Chidambaram told a press conference, where he noted the Indian economy continued to grow at a satisfactory pace.

"The stock market indices are important indicators but they are not the only indicators," the minister said before the markets opened. He stressed that despite the downturn the Indian economy was predicted to grow 7.9 per cent during the current fiscal year.

Mentioning that the investment rate was high and tax collections were on the rise, Chidambaram said the root problem in the present uncertainty was liquidity, which would be addressed by both fiscal and monetary measures.

Recent cuts announced by the central Reserve Bank of India in the cash-reserve ratio, or minimum cash to be held by the banks, was a step in the direction.

Chidambaram's attempt to soothe investors, saying there was no reason for panic, lifted market sentiment leading to the benchmark Sensex index to 11,170 at noon (0630 GMT), for a gain of 643.33 points or 6.1 per cent.

All the 30 shares including ICICI Bank, HDFC Bank, Reliance Energy and State Bank of India that go into the basket of Sensex shares were trading positive.

Similarly, the broader 50-share Nifty index gained 5.7 per cent to 3,465.80, up 185.85 points.

The Sensex had taken a heavy beating last week - finishing the week's trading at 10,527.85 points, down 1,998.47 points nearly 16 per cent over the previous Friday at 12,526.32 points.

Credit rating agency Crisil estimated Indian stockholders saw investments of over 2.3 trillion rupees (over 50 billion dollars) being wiped off in September, while another estimate said 10 top Indian companies lost 1.23 trillion rupees (over 25 billion dollars) in market capitalization last week.

ICICI, the country's largest private sector lender, said it had sufficient liquidity and insisted that depositors' money was safe.

In an interview with NDTV Profit news channel, ICICI Bank chief executive KV Kamath called it "significantly overcapitalized" and profitable.

Persistent rumours that India's leading private banks could go bust owing to big exposures in foreign markets had battered ICICI share prices last week as it slid by nearly 20 per cent on Friday.

Kamath said the bank will not be "cowed down" by rumour-mongering and alleged that it had evidence of organized efforts to destabilize the bank. (dpa)