The domestic market is expected to react to the stimulus package today, that was announced late evening Friday after the market ended. Infrastructure and the banking are the two sectors that would be in the limelight as the second stimulus package covers a series of measures aimed at easing credit delivery to sectors impacted most by the economic slowdown, but contains limited deficit-financed government spending as indicated earlier by the Planning Commission deputy chief Montek Singh Ahluwalia..

The government has liberalized the overseas borrowing norms, states have been allowed to access market for borrowings to the tune of Rs 30K crore, benefits to exporters have been restored, and has also allowed state-run India Infrastructure Finance Company (IIFCL) to issue additional tax-free bonds to the tune of Rs 30K crore. Integrated township projects have been allowed to tap External Commercial Borrowings (ECB).

Also the Reserve Bank of India announced reduction in key rates. The repo and the reverse repo has been cut by 100 basis points while cash reserve ratio (CRR) has been reduced by 50 bps. The reduction in CRR will infuse Rs 20,000 crore in the system.

Apart from the domestic cues, the market is also expected to get support from the major Asian markets that have opened in the green, Shanghai Composite was trading up by 43.24 points or 2.37%, Hang Seng has again surged by 224.97 points or 1.50% and Nikkei 225 was up 183.56 points or 2.07%.

Similarly, Straits Times is trading higher by 25.65 points or 1.40%, Seoul Composite added 19.35 points or 1.67% and Taiwan Weighted was up 139.05 points or 3.03%.

The US market brushed aside dour economic news to end with gains of around 3% on the first trading day of the New Year. The market lived up to the expectations of many analysts that it would have a fresh start in the New Year after a dismal 2008.

The Dow Jones industrial average rose 258.30 points, or 2.94%, to close the day at 9,034.69. The Standard & Poor’s 500 index advanced 28.55 points, or 3.16%, to 931.80, its highest close since November 5 while the Nasdaq composite index gained 55.18 points, or 3.50%, to 1,632.21.

The Dow Jones industrial average ended the week up 519.14, or 6.1%, at 9,034.69. The Standard & Poor’s 500 index rose 59, or 6.8%, to 931.80 and the Nasdaq composite index ended the week up 101.97, or 6.7%, at 1,632.21.