Market may move up ..

The market may recover after Wednesday’s slide caused by concerns about the weakening economy and worries on concerns over corporate governance standards at Indian firms. Reports that the government is working on a second stimulus package to pump prime the economy may aid the recovery.

In the second stimulus package to boost growth, the government is likely to provide sops to the automobile, housing and steel sectors. As per reports, the committee of secretaries (CoS) on economic crisis is examining proposals like increasing the limit for low interest-rate housing loans from Rs 20 lakh to Rs 30 lakh, increasing the tax rebate on home loans, reducing car and two-wheeler loan rates by 2% (from the current 12-14%), increasing depreciation and ensuring faster disbursal of Central value added tax (Cenvat) credit for the steel sector.

The first stimulus package unveiled by the government on Sunday, 7 December 2008, involved Rs 20,000 crore in additional government expenditure, an across-the-board 4% excise duty cut amounting to Rs 8,700 crore and benefits worth Rs 2,000 crore for exporters.

The new package could also include monetary measures such as cuts in the cash reserve ratio (CRR) and statutory liquidity ratio (SLR) by the Reserve Bank of India (RBI). CRR, down to 5.5% from 9% in August 2008, impounds cash with RBI while SLR mandates banks to keep a specified proportion of their deposits in government securities.

Asian stocks were mostly in the green after the US Federal Reserve on Tuesday, 16 December 2008, slashed rates to a target rate of zero to 0.25% from 1%. Key benchmark indices in Japan, Singapore, South Korea and Taiwan were up by between 0.04% to 0.56%.

US stocks fell on Wednesday, 17 December 2008, as the government's effort to stave off a deep economic recession raised worries about mounting public debt and blunted optimism following the Fed's sharp rate cut on Tuesday. The Dow Jones industrial average shed 99.80 points, or 1.12%, to 8,824.34. The Standard & Poor's 500 Index fell 8.76 points, or 0.96%, to 904.42. The Nasdaq Composite Index fell 10.58 point, or 0.67%, to 1,579.31.

Closer home, concerns about a lack of transparency and worries about absence of strict corporate governance practices at Indian firms pulled the market down on Wednesday, 17 December 2008, after India's fourth largest software firm in terms of sales, Satyam Computer Services' aborted attempt to buy two related companies. The BSE 30-share Sensex lost 261.69 points, or 2.62%.