Positive global cues and hopes of another sector-specific stimulus package and tax sops by the government in this year’s interim budget helped the Indian stock market regain some of its early week losses for the week of February 2-6. Renewed concerns about the prevailing economic conditions in the US and continued selling pressure from FIIs weighed heavy on key benchmark indices as the Sensex witnessed a fall of 123.38 points for the week ended February 6. In Sensex news, out of the five trading sessions, markets remained in positive territory for three days. In Sensex today, a large number of madcap and smallcap stocks posted handsome gains. Clearly reflecting the investors’ mood over these counters, Smallcap and Midcap indices inched 1.43 pr cent and 1.05 per cent higher respectively. Among the top gainers include Ranbaxy Laboratories, Grasim Industries, Tata Motors, Reliance Industries, ICICI Bank and Tata Consultancy Services. ONGC, Tata Steel, State Bank of India, Mahindra & Mahindra, Infosys, NTPC, Wipro, HDFC, Reliance Communications and ACC also registered gains.

In stock market news, Union home minister P Chidambaram hinted at the possibility that the forthcoming interim budget may include some surprises in form of tax cuts, thus, giving the slowing economy the much required fillip and help prevent massive jobs losses. He further said that constitution does not bar an outgoing government from unveiling tax benefits. The interim budget will be announced on February 16 before the general elections. In stock market news, S&P has forecast growth rate for India for calendar year 2009 between 5.8-6.3 per cent. According to Subir Gokarn, S&P chief economist (Asia-Pacific), the agency has a slightly more precise number for the financial year 2009-10 which is in the same range of 6.1 per cent. The factors that have driven our forecast for the region down come from two competing factors. S&P do see all of the policy stimulus measures announced both monetary and fiscal over the last 3-4 few months back start to generate some modest recovery in late 2009. But the first half is being buffeted by very significant combination of credit freeze and financial market problems, capital flows and tight monetary policy stance.

The current quarter is going to be bad and so do second quarter but things will improve in second half. From the Indian perspective much of the liquidity that was used in the system was invested in government securities and that’s why see sharp decline in government securities. That has translated now into more diversified lending to consumers and companies. It is good to see banks started to lower lending rates but credit flows in not pretty, which we have to watch out for in the next few days. S&P was right from about August-September period looking at a very sharp decline motivated by sense that monetary policy would respond very aggressively. The whole Asian region last week saw current their rates and we would expect India to do more of that because of overall slack demand condition. Our inflation outlook is very benign, said Gokaran.

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