Byapaar.com -The Indian Business Blog

In an unprecedented mood a world consortium of Central Banks from many leading countries led by the US Federal Reserve (Fed) have tried to infuse huge liquidity in the credit market which is starved of funds. This caused a positive response from the market which has been on a sustained bull runs for last few months. The DOW JONES immediately opened at 250 points higher than the previous closing.

The US Fed has declared on Tuesday that from now on financial firms can use home loan mortgages as collateral for the next 28 days. This released about $200 billion in the US liquidity market. On the other hand the European Central Bank, the Bank of Canada, Swiss national Bank and the Bank of England have also announced measures to infuse huge fund simultaneously to arrest the contraction of market trends every where. The burnt of these measures was felt by the bond market that has naturally crashed.

Martin Blum, head of emerging markets research at UniCredit in Vienna said

“In the near term, the Fed and global central banks have provided the thing everyone needed, and that’s cash”.

As part of latest policy updates, the Bank of Canada provided C$4 billion, Swiss National Bank $6 billion, and the European Central Bank said it would auction bonds for a term of 28 days thereby providing $15 billion to the credit market.

But some market analysts say that, these measures by the world consortium might revive the market immediately, however questions remains how far these soaps would go in reviving the world economy as a whole for a long duration that everyone longs for.

“The Fed action is good for a day or two”

according to Michael Cheah of AIG Sun America Market Management.

In the Indian context, the market which has been on a sustained bull run for nearly two months and lost almost 30% seems to be upbeat with the latest move which is evident from a jump of 1.25%  of share prices in the BSE Sensex .

“It will be certainly good for our markets. Some action was necessary from the Fed and they are going in the right direction. Our markets have been on a recovery path and additional support by the Fed will consolidate gains further in the domestic markets”

said Kunj Bansal, senior vice-president, portfolio management services at Kotak Securities. Evidently Indian market has recovered significantly since Tuesday.

True to its name, the booming Indian economy has demonestrated its strength once again by putting four Indians in the top 10 of Forbe’s list of top 10 wealthiest people in the world. Just for information, Warren Buffet, Chairman of Berkshire Hathaway Inc. and the Bridge partner and fellow philanthropist pal of Bill Gates, the Microsoft Founder has pushed his friend to third position to claim the title of world’s richest man with a net worth of a staggering $ 62 billion, an increase of $10 billion over last 12 months. The Mexican telecommunication tycoon Mr. Carlos Slim is estimated to be worth $60 billion enabling him to surge ahead of Bill Gates, worth $58 billion.

But there is no surprise in the list which has seen lots of changes in the top 10 over the last 13 years except Bill Gates holding the number one position during this long period. The surprising element is the rise of four Indian into the top 10 richest billionaires club. The booming Indian economy has resulted into a scorching stock market that shored up values of these four Indian business moguls. Heading the list of Indians at number four in the Forbe’s list is L.N. Mittla, the steel baron ( ArcelorMittal) with a net worth of $ 45 billion. Following him at number five is Mukesh Ambani, Chairman of RIL at $43 billion thus making him the richest resident Asian. His estranged sibling Anil Ambani who broke away from the main RIL group is the sixth richest person in the world worthy of $ 42 billion a net gain of 12 places and $23.8 billion during last 12 months. K.P Singh, who is leading Indian real estate boom with DLF has become the fourth Indian in the top ten ( at number eight) as his fortune rose to $30 billion due to stock market boom.

The list of Billionaires club is now pegged at 1,125  and not surprisingly the US heads the list with 475 billionaires, followed by Russia (87) and Germany (59). India heads the list of billionaires in Asia with 53, 19 of them making their debut. This takes India to fourth in overall position in the Forbe’s list.

The US greenbuck sank to a historic low beyond 1.53 mark against the stronger Euro ahead of the ECB meeting on Thursday. This has rattled investors worldwide and pushed gold prices at an all time high. The European Central Bank is expected to keep the interest rate at the same level as this higher interest rates over the US rates is the source of Euro’s strength.

Tomoko Fujii, the head of economics and strategy for Japan at Bank of America in Tokyo says -

“There are pretty clear expectations for a widening in interest rate differentials, keeping the dollar at a disadvantage,”

Analysts feel that, it is not only the interest rate for which investors are dumping the US Dollar for the Euro, but there are other factors as well. Recent data coming out of US points towards an economic contraction that has made people weary to put their money on the greenbuck. According to the ADP Employer Services, the US private sector has cut 23,000 jobs during February and coming employment data update also seems to hold bleak prospect.
On the other hand European stocks are coming under severe pressure due to the competitiveness factor caused by a soaring Euro. Banks are the worst hit despite stock markets saw a slight gain yesterday after loss for five straight days  . The Japanese Nikkei also gained 1.9 percent on Thursday.