The review of the external sector developments and measures taken in the wake of the US interest rate hike, oil price hike and exchange rate volatility reflect the professional way of coping with changing situations.

The Bank Rate and the CRR remain unchanged. This will provide stability to the money and forex markets. The most positive development for the capital market is the RBI's decision of accepting the recommendation by the technical committee of RBI and Sebi on the ceiling prescribed for banks' investment in shares and debentures, which now relate to five per cent of the outstanding credit and not to the incremental deposits of the previous year. This should bring in higher institutional funds to stock markets and encourage its broad-based development either directly or through investments in UTI or other MFs.

RBI has given full autonomy to the individual bank's board in fixing annual ceilings and guidelines for investments. The steps are bound to significantly fuel the growth of capital market and mutual fund industry. In the light of this measure and a very positive and growth promoting credit policy, my outlook for the stock market remains optimistic.

Buoyancy in tax collection reflects good growth in the household and corporate incomes and it should generate higher growth in consumer demand in the coming season. All this bodes well for the stock market reversing the current bearish trend. Order-driven, screen based trading in G-Secs at the stock exchanges has been, in principle was accepted and this will widen and deepen the G-Sec market and help in pricing of securities. This will lead the way for an active secondary debt market. The steps taken on the technology up-gradation front and setting up of a Working Group for Internet Banking will pave way for a fast transition of the Indian banking into a technology driven electronic banking.

The author is Chairman, UTI