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Our Bureau

Mumbai, Jan. 2 Execution of the stimulus package will be crucial, said market participants on Friday, when the Centre announced the much-awaited second stimulus package.

RBI announced a 100 basis point cut in repo and reverse repo rates as well as 50 basis point cut in credit reserve ratio.

“Monetary policy announced by RBI is up to market expectations and was already being priced in the bond yields. The stimulus package is the best the Government could have done in their current capacity and fiscal position. However, implementation has always been India’s weak-link and will make the difference,” said Mr Saurabh Nanavati, CEO of Religare Asset Management Company.

“Government has taken the right steps of making IIFCL and the States as the intermediaries, who will transfer the liquidity from savers to borrowers, which is the biggest problem currently.”

Speaking on the Government’s initiative to address the slowdown in economic growth, Mr Raamdeo Agrawal, Director and Co-founder of Motilal Oswal Financial Services, said: “Market will react positively to the twin measures. Financial sector will be the direct beneficiary. Cost of money will come down. Government wants banks to do more business, so banks will be in terrific shape after these measures.”

Mr Abhay Bhalerao, Director, Equirus Capital Private Ltd, said: “There is a clear intention to make more money available towards infrastructure and realty sectors. I think this should go a fair distance in relieving the distress, especially with respect to financial closure of some of the projects. In terms of the markets, the twin measures should benefit realty, infrastructure, cement and steel.”

The RBI’s rate cut measures will be more effective for the markets than the stimulus package, said Mr Manish Sonthalia, VP-Equity Strategy, Motilal Oswal Financial Services. The RBI’s measures will definitely lift the markets on Monday, he added.

Striking a different note, a Mumbai-based fund-manager observed that the stimulus package is not going to have much of a material and long-lasting impact on the markets.

More Stories on : Financial Policy | CRR & Bank Rates | Economy | Outlook

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