Fiscal package positive for market sentiment

The blend of government’s fiscal spending proposals and Reserve Bank of India’s (RBI) interest rate cuts announced over the weekend to counter India’s economic slowdown, amid a global recession, may lift investor sentiment early this week. Though the fiscal stimulus package has fallen short of expectations of the stock market and industry, fund managers said that the market may cheer the measures, as they have come along with rate cuts, which is considered critical to revive consumer spending. A positive US equities closing on Friday, even after the economy’s worst monthly job losses in 34 years, may add to the overall positive sentiment. “The combination of interest rate cuts and the fiscal programme is positive for market sentiment in the short-term, though their impact on the economy would be seen only in the medium-term,” said Birla SunLife Mutual Fund’s A Balasubramanian.