The concerted efforts by the policy makers and the regulators are expected to have a salutary effect on the market. However, as analysts are busy working on the impact of the fiscal stimulus, the sentiment remains positive. While the markets are expected to react positively, chances of an immediate turnaround is ruled out.

Saturday?s RBI announcement of a 100 basis point cut in the repo and the reverse repo rates and the fiscal stimulus package of Sunday were in line with market expectations. Industry players seem to be wanting more from the government. Commenting on the stimulus package announced by the Union government, a senior fund manager from a domestic fund house said the decision was in the right direction to resist the global recessionary pressures.

The 400-point climb of the Sensex on Thursday was in expectation of the rate cuts and the fiscal stimulus the markets had factored in earlier. However, analysts are pleased with the overall direction the government is taking to spur growth. ?There is a concerted effort to spur up growth and this is a welcome move. Especially with inflation coming down, the regulators can go the whole hog and stimulate the economy to put in back on the track,? said an analyst with an overseas fund house. Most market players expect more packages and rate cuts in the near future.

?These moves are in line with the market expectations. It was expected consequent upon the sharp reduction in inflation over the last few weeks and the desperate need for kick-starting the process of providing a stimulus for growth,? says Sudip Bandhyopadhyay CEO, Reliance Money.

The RBI governor has also hinted that the inflation levels will be below the target 7% by the year end. And if this happens then more rate cuts can be expected. Also, the impact of the petroleum product cuts will be felt in a few days and this too shall have a salutary effect on the inflation. Analysts reckon that the direct impact of the oil price cut could be a reduction of 40 basis points in the inflation numbers. Additionally, the impact of the fiscal stimulus, especially the reduction in the Cenvat, will reduce inflation, and the lower costs are expected to spur demand. The rise in fiscal deficit, however, remains a concern for the markets.

K Ramkumar, head, fixed income, Sundaram BNP Paribas Mutual Fund, reckons, ?This is good news for the corporate debt segment, while government securities will be less bullish compared to the debt segment.? Also, several sectors in the markets, the real estate, automobile and banking stocks are expected to perform better in the next week, reckon analysts.

However, for the equity markets to surge could take some more time as there are international developments to be considered, say analysts. Rajesh Jain vice-president, SMC Global, says, ?World markets have discounted all negative news, including the US falling into recession, high unemployment rate and if US benchmark index Dow closes above 9,000-mark it would signal a recovery, which all world markets would follow,?

Deven Choksey, MD of KR Choksey Securities, says, ?I think this decision has been delayed by over one-and-a-half month. It will take over two months for this decision to impact the market. Now we hope that we will see strong measures by the central bank in the credit policy in January.? January will also be a time when FIIs and other overseas investors are likely to take a fresh look at their global investment allocations. Hence, the market will also be looking at January to start the New Year with a new perspective.