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Rate Cut Rumors in Market

November 20, 2008

There are rumors that the RBI may announce steep rate cuts in a week or so and reports that the government has decided to inject a whopping Rs50,000cr for funding infrastructure projects in a bid to pump-prime the economy.

The RBI is also likely to create a special repo window to allow banks to borrow up to 100 basis points of the statutory liquidity ratio (SLR) – the percentage of deposits invested in government securities – to make available Rs40,000cr for infrastructure
like national highway projects.

It is unlikely that the market situation will improve in India in the near future as American markets touched a new 5 year low and other markets follow Dow Jones and then lead in going down further.

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