World Consortium Tries To Lift Market Mood
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. 
