Click to play videoNew Delhi: The government’s moves coming in quick succession of each other have made experts sit up.
On Tuesday, the government injected Rupees 20,000 crores into the system and followed it up with a whopping CRR cut, on Wednesday.
CNN-IBN’s Stocks Editor, Udayan Mukherjee spoke about whether these were measures to only calm the market or is India too closely connected to the global markets in the economic crisis.
“You are right. What the government is trying to do is what they have to do. There's no question about the system being starved of liquidity. Companies are starved of liquidity and therefore they just have to throw more money into the system.
"Having said that it might be just what they call in economics as a necessary but not a sufficient condition for the markets to move up. The markets like it but is it enough for the markets to move up,” predicted Mukherjee.
While on the bear-trap situation, many want to know about Nobel laureate Paul Krugman's warning of a global recession. People also want to know if there is any indication about how long could the grey situation last in terms of weeks, months or years.
“I don't think it’s a question of weeks, months may be years. That’s the long problem at the core of issue. It’s no longer about financial markets crisis which has been the lead reason why stocks have no collapsed globally and locally. But we muddle through this mess with the hope that the regulatory action in US will put an end to the financial distress out there.
"People are looking beyond that financial sector problem and asking themselves how prolonged a recession are we staring at, across the world. Paul is a very important voice and many other important voices have pretty much echoed the same concern over the last few days.
"The worry is that we are staring at a fairly significant and deep recession, perhaps even in global economics. In that case that’s not exactly the best back drop for a bull market flourishing, when you are staring into global recession,” Udayan Mukherjee concluded.
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