Stock Market News

RBI has cut key rates and ratios for Banks many times recently - CRR, SLR, Repo rates to enhance liquidity and to signal reduced interest rates.

 

Lower rates boosts stocks as they boost corporate bottomline by way of lower borrowing costs. The Reserve Bank of India (RBI) on Saturday, 1 November 2008, unexpectedly cut its main short-term lending rate for the second time in as many weeks to ease a growing cash squeeze, spur faltering economic growth and fend off damage from the global financial crisis.

 

The Securities & Exchange Board of India (Sebi)'s decision to extend the tenure for lending and borrowing of stocks is aimed making the domestic stock lending and borrowing (SLB) mechanism more robust and increase liquidity in the secondary markets. Short selling refers to selling of shares one does not own and a SLB mechanism facilitates this activity.

 

Prime Minister Manmohan Singh told top business leaders on Monday, 3 November 2008, that the government will take all the necessary monetary and fiscal policy measures to protect growth. The Prime Minister also said the government was working closely with other countries to ensure coordinated policy action for the containment of the global financial crisis

 

The central bank today said it would conduct a special 14-day money market operation for mutual funds and non-banking finance companies (NBFC) on Monday, 3 November 2008, for a cumulative amount of Rs 60000 crore ($12.2 billion) to help meet their liquidity needs.

 

Meanwhile, the government is reportedly considering floating a special purpose vehicle (SPV) to buy non-performing assets of domestic banks to protect the financial sector from wide-spread defaults. The proposal for creating an SPV is being debated by the finance ministry and the regulators as a pre-emptive step to protect the financial sector from widespread defaults, the reports added.