Market may edge higher on likely govt measures to boost economy

[simantha roger]

 

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The market regulator Securities & Exchange Board of India (Sebi)’s decision to allow crossing margining and reports that the government is likely to announce a series of measures to boost economic activity, may lift the bourses. Gains in overseas stocks will also support domestic bourses.

Sebi, after trading hours on Tuesday, 2 December 2008, extended the facility of cross margining across cash and derivatives segments to all categories of market participants. So far, this benefit had been restricted to institutional trades. The move will lower margin payment for traders, who are holding opposite positions in the cash and futures segment of the same stock. This will come has a big relief to broking firms as cost of working capital has risen sharply in the past few months.

Meanwhile, the government is set to announce a slew of measures at the weekend to pump prime the economy, media reports suggest. The likely measure include cheap credit to exports and low-cost housing as well as making available additional funds worth Rs 50000 crore to the infrastructure sector. There is also possibility of the Reserve Bank of India (RBI) announcing another set of cuts in key policy rates like the cash reserve ratio (CRR), the repo rate and the reverse repo rate.

CRR is the ratio of bank deposits that commercial banks are required to keep with the central bank. Repo rate is the rate at which RBI lends to commercial banks and reverse repo rate is the rate at which RBI accepts deposits from banks

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