Indian stocks hope for rate cuts this week
Monday, 22 December 2008
MUMBAI, Dec 21 (AFP): Indian markets this week will be hoping for a fresh economic stimulus package to boost economic growth and further rate cuts from India's central bank after inflation fell to a nine-month-low.
India plans a second economic stimulus package to fight flagging growth, government officials have said amid growing pessimism about prospects for Asia's third-largest economy.
Earlier this month, authorities announced four billion dollars in extra spending and interest rate cuts to try to shield India from the global financial crisis and the fallout from last month's deadly attacks on Mumbai that have further shaken economic confidence.
India's inflation fell to a nine-month low Thursday of 6.84 per cent, according to the Wholesale Price Index, the most watched cost-of-living gauge.
"Expectation of further rate cuts from the Reserve Bank, another stimulus package from the government especially for saving the housing and auto sectors should give support to the market," said Alex Mathew, head of research at Geojit Financial.
"We expect the Reserve Bank to slash both the repo and the reverse repo rates by 100 basis points by early January," said Rajeev Malik, economist at Macquarie Research.
This would be ahead of the scheduled quarterly monetary policy review on January 27.
For the week to December 19, the benchmark 30-share Sensex index rose 4.22 per cent or 409.84 points to 10,099.91.
Since October, the Reserve Bank of India has reduced the repo-the rate at which the central bank lends to commercial banks - - by 250 basis points from 9.0 per cent to 6.50 per cent.
As of Friday's close, overseas funds had sold Indian stocks worth US$13.06 billion for the year.
During the same period last year, overseas funds bought $16.47 billion worth of Indian equities.
India plans a second economic stimulus package to fight flagging growth, government officials have said amid growing pessimism about prospects for Asia's third-largest economy.
Earlier this month, authorities announced four billion dollars in extra spending and interest rate cuts to try to shield India from the global financial crisis and the fallout from last month's deadly attacks on Mumbai that have further shaken economic confidence.
India's inflation fell to a nine-month low Thursday of 6.84 per cent, according to the Wholesale Price Index, the most watched cost-of-living gauge.
"Expectation of further rate cuts from the Reserve Bank, another stimulus package from the government especially for saving the housing and auto sectors should give support to the market," said Alex Mathew, head of research at Geojit Financial.
"We expect the Reserve Bank to slash both the repo and the reverse repo rates by 100 basis points by early January," said Rajeev Malik, economist at Macquarie Research.
This would be ahead of the scheduled quarterly monetary policy review on January 27.
For the week to December 19, the benchmark 30-share Sensex index rose 4.22 per cent or 409.84 points to 10,099.91.
Since October, the Reserve Bank of India has reduced the repo-the rate at which the central bank lends to commercial banks - - by 250 basis points from 9.0 per cent to 6.50 per cent.
As of Friday's close, overseas funds had sold Indian stocks worth US$13.06 billion for the year.
During the same period last year, overseas funds bought $16.47 billion worth of Indian equities.