NEW DELHI: Authorities are keeping a close watch on financial markets and expect stability to return soon after the nervous reaction to Britain’s decision to leave the European Union on Friday.

Officials said they expect volatility to stabilize as financial markets come to terms with the fallout of Brexit. “It is difficult to predict how long the volatility will persist but we expect Indian markets to stabilize faster than other markets, mainly due to our strong macroeconomicĀ parameters,” economic affairs secretary Shaktikanta Das, told TOI. “Volatility is likely to continue for some time,” said Das.

The finance ministry and the RBI are coordinating to ensure that volatility in the markets is contained. “We are in touch with other regulators and keeping a close watch. Appropriate interventions will be made in a judicious manner as and when required,” Das said.

Finance Minister Arun Jaitley, who returns to the capital from Beijing on Sunday, is expected to take stock of the situation on Monday .

Policy makers have been pointing to improving economic fundamentals, which they said will blunt the impact of Brexit on the domestic economy. Forecast of robust monsoon rains is expected to revive rural demand and help calm food prices. Economists expect a cut in interest rates and around 5 per cent retail inflation, thanks to the monsoon effect.

“We continue to expect another 25-basis-point repo rate cut in third quarter of FY17. While there is considerable uncertainty with respect to Brexit-related adjustments in financial markets, the possibility of an earlier than anticipated rate cut cannot be ruled out,” said Shubhada Rao, chief economist at Yes Bank.

“Notwithstanding the slowdown in global growth, India’s growth outlook is expected to remain encouraging, largely on domestic drivers. Recovery in domestic demand, led by satisfactory performance of monsoon, higher incomes following 7th Pay Commission, government’s continued emphasis on reviving manufacturing sector through structural steps and lagged impact of easy monetary policy would help cushion India’s growth momentum. We expect FY17 GDP growth to revive to 8.1 per cent from 7.6 per centĀ in FY16,” Rao said.