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from Expert Zone:

India Market Weekahead: Ride the election rally with some caution

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(Any opinions expressed here are not those of Thomson Reuters)

The Nifty touched a high of 6758 during the week, part of a market rally for 10 consecutive sessions - the longest streak in five years.‎ An overdue correction set in towards the end of the week with the Nifty ending flat at 6694.

Advance-decline data suggests that interest is shifting to the small and mid-cap space where advances outpaced declines. Although we are touching new highs, the missing euphoria indicates investor caution  that is good for the health of the market.

As expected, the Reserve Bank of India maintained the status quo at its policy meet but the commentary was more hawkish. The El Nino effect on the monsoon would be watched closely by the central bank governor as well as market participants as this could negate the possible election outcome of a stable government.

India’s core sector grew by 4.5 percent in February compared with 1.6 percent in January but HSBC PMI manufacturing data for March dipped to 51.3 points from 52.7 points in February. Services PMI touched a three-month low of 47.5, indicating a contraction.

from Counterparties:

MORNING BID – The Cleveland Administration in the market

It took the market a little while to get the full measure of the day's biggest economic news. (And no, it wasn't the shout-fest on CNBC that seemed to have resulted in the delaying of an IPO and one of the first real reckonings among many people about the ramifications of high-frequency trading.)

But it seems to have truly settled in now: Car sales were up big in March, to a seasonally adjusted annual rate of 16.3 million units. That's better than expected, and it's one of the first big data points that lends credence to the idea that there was a real constraint linked to winter weather that was the worst in about 13-14 years.

from Breakingviews:

High-speed traders just latest market rent-seekers

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By Martin Hutchinson
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

High-speed traders are just the latest to earn opprobrium as market rent-seekers. In his new book “Flash Boys,” Michael Lewis claims they are rigging U.S. equity markets. Even Goldman Sachs Chief Operating Officer Gary Cohn acknowledges concerns. New rules, taxes or structures could reduce the high-frequency traders’ unfair advantages.

from India Insight:

Markets this quarter: Sensex gains 5.7 percent, L&T surges 19 percent

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By Aditya Kalra and Sankalp Phartiyal

Indian shares posted record highs in March as strong foreign buying sent blue-chip stocks such as Larsen & Toubro higher and boosted overall investor sentiment ahead of a general election.

Provisional data showed foreign investors bought shares worth more than $3 billion in March, pushing the BSE Sensex to a life high of 22,467.21 points on the last trading day of the quarter. While the index rose 6 percent during the month, it rose 5.7 percent in the Jan-March period.

from Counterparties:

MORNING BID – Crushing It

Is King Digital Entertainment the next Zynga or not? The markets may not find out with today's first day of trading in the London-based company, but it will provide a bit more context for those eager to build some kind of "time wasting" index or something like that. The King IPO has other gamemaker companies waiting in the wings at a time when there's been a high volume of IPOs this year coming from unprofitable companies - according to Renaissance Capital, the IPO research firm, 66 percent of this year's 53 IPOs were unprofitable names, though Kathleen Smith, principal at the firm, points out that if you clear out the biotech names, just 37 percent are those that do not yet have earnings. (Whether this is a good argument or not is another matter -- witness the trading lately in the biotechnology shares overall, which have been pummeled in the last few weeks.)

The obvious reference point for King is Zynga, which has lost about half of its value since the company's IPO in 2011 that valued it at about $8.9 billion. And things did well for them as long as people were interested in Farmville, until they weren't. Right now, Candy Crush is the current darling, drawing in more revenues on Apple's App store than any other in 2013, and, well, it just happens to garner three-quarters of its revenue from this game (well, 78 percent, actually). These kinds of fads tend to fade, though, putting pressure on the company to keep filling the void with some kind of new version or new product, not an easy task.

from Counterparties:

MORNING BID – Seeing the Oracle

The markets are still a few weeks away from the earnings season (didn't the last one just end?) but there's an early - or late, if you will - precursor to all of that with Oracle's results due out after the closing bell on Tuesday.

Whether it's a harbinger of what to expect for technology companies remains to be seen. But as a company with substantial revenue coming from the Asia-Pacific, it's going to be closely watched to see what kind of toll slowing growth in China has taken on demand for technology goods for companies operating in the region in general.

from Counterparties:

MORNING BID – Losses continue, and other concerns

The ructions in China have had an interesting effect on commodities prices – good for gold, crappy for copper. And more developments in this area should be expected as the market deals with growing weakness and the threat of a deflating credit bubble coming from the massive lending to various sectors in the world's second-largest economy. Copper has been rather weak of late, but the broader CRB commodities index is actually much higher on the year. This is the biggest divergence since the eurozone debt crisis in 2011, points out Ashraf Laidi, the chief global strategist at City Index in London.

Again, the recent selling has had to do with the Chinese companies using the metal (and iron ore, too) as collateral for cheap dollar financing. So we've hit a weird storm here – weak yuan that makes those loans more expensive, and copper falling too, and again, that also messes with those loans. Put that together and you have a few markets moving in directions that are not beneficial to a major counterparty in several of them, for one, and resulting in the kind of activity that tends to turn into a vicious cycle.

from Expert Zone:

Is the current euphoria in equity markets justified?

(Any opinions expressed here are those of the author and not of Thomson Reuters)

The third-quarter results season corroborates my view that 2014 will be a year of fragile recovery for the Indian economy. Fragile, I reiterate.

The market, however, has run up to an all-time high, with the Nifty breaching the psychological barrier of 6,500. Is the euphoria justified?

from Anatole Kaletsky:

Markets already see a Putin win

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Oscar Wilde described marriage as the triumph of hope over experience. In finance and geopolitics, by contrast, experience must always prevail over hope, and realism over wishful thinking.

A grim case in point is the confrontation between Russia and the West in Ukraine. What makes this conflict so dangerous is that U.S. and EU policy seems to be motivated entirely by hope and wishful thinking. Hope that Russian President Vladimir Putin will “see sense” -- or at least be deterred by the threat of sanctions to Russia’s economic interests and the personal wealth of his oligarch friends. Wishful thinking about “democracy and freedom” inevitably overcoming dictatorship and military bullying.

from Counterparties:

MORNING BID – Bubble, bubble

Opinions vary right now as to whether we're seeing the return of bubble-like qualities across a broad swath of the market or just in select names (which really isn't a bubble, then, bubeleh, just overvalued stocks).

With the Ukraine issue subsiding a bit, investors had a chance to sink their teeth back into the market, including a number of areas that seemed ripe for buying, like small-cap names, which saw a very strong 2.6 percent increase on Tuesday that outdid the larger-cap stocks.

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