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Monday January 5, 03:00 PM
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India econ package to give short-term boost - BNP Paribas
MUMBAI (Reuters) - India's second fiscal stimulus package within a month is expected to provide a short-term boost to the markets, BNP Paribas Securities India said in a note on Monday.
* "Over the near-term, market could rise. Shares of banks, engineering, construction, property, automakers could benefit," analyst Manishi Raychaudhuri said in the note.
* Fiscal measures of the second stimulus package were more muted than in the first, Raychaudhuri said, adding that the government's ability to provide fiscal stimulus is limited. * Measures to enhance credit availability and boost infrastructure are relatively stronger than measures adopted for exporters, auto and commodity sectors, the note said.
* On Friday, the Reserve Bank cut its key lending rate to an 8-1/2-year low of 5.5 percent and the government opened the corporate bond market to more foreign investment, eased overseas borrowing rules and promised more capital to state-run banks.
* A Reuters poll in early December estimates India's economic growth to slow to 6.8 percent in 2008/09 and 6.2 percent in 2009/10 from 9 percent in 2007/08.
* BNP Paribas said willingness of banks to lend and cut credit costs is still an issue as only a few state-run banks like Union Bank of India (UNIONBANK.NS : 255.5 +7.2
) and Allahabad Bank have announced rate cuts despite the liquidity injection.
