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from Expert Zone:

National agenda to bring $100 billion of domestic household savings in capital markets in next five years

(Rajiv Deep Bajaj is the Vice Chairman and Managing Director of Bajaj Capital Ltd. The views expressed in this column are his own and do not represent those of Thomson Reuters)

Currency of different denominations are seen in this picture illustration taken in Mumbai April 30, 2012. REUTERS/Vivek Prakash/FilesIndia is an attractive investment destination for foreign institutional investors, due to its vibrant economy, favourable demographics, high growth potential and well diversified capital markets. In fact, the benchmark Nifty has representation from 10 broad sectors, four with weightage in double digits.

One will find very few markets in the world with such diversity. Still, the irony is that our domestic retail investors don’t consider capital markets as an avenue for long-term wealth creation. The statistics speak for themselves. Household savings flowing in domestic equity markets is practically negligible.

In the last five years ending 2012/13, only 742 billion rupees of household savings has flown into capital markets, constituting only 1.5 percent of total household financial savings, 0.6 percent of gross domestic saving and a meagre 0.19 percent of GDP in this period.

from Expert Zone:

India Markets Weekahead: Pre-budget rally may be muted

A man looks at a screen across the road displaying the election results on the facade of the Bombay Stock Exchange (BSE) building in Mumbai May 16, 2014. REUTERS/Danish Siddiqui/Files(Any opinions expressed here are those of the author and not of Thomson Reuters)

The Nifty touched a new high of 7,700 before cracking on Friday to slip about 0.5 percent for the week. This was primarily triggered by the unrest in Iraq and the subsequent rise in crude prices.

The markets were also overbought aided by a relentless rally since May 9‎, with the CNX Nifty climbing about 16 percent, S&P BSE Midcap Index rising 26 percent and the S&P BSE Small cap index jumping 35 percent. The last one-month saw 115 multi-baggers with 92 percent of traded stocks gaining during the period. The probability of picking a loser was minimal. It seemed making money had never been so easy.

from Expert Zone:

The rupee at a crossroads

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

The rupee was tossed around quite a bit in the last 10 months. It dropped to a low of nearly 69 to the dollar, creating an economic crisis, before it recovered and is now at 59-60. The threat is not that it may drop once again, but that it may appreciate further and upset the economy in other ways.

Why would the rupee appreciate? Because there are expectations the Narendra Modi government will facilitate development and enable the economy to get back on course. This is what drove the Sensex beyond 25,000. But the currency market was more stable in spite of the huge inflow of $2.2 billion in 10 trading days of May.

from Expert Zone:

India market weekahead – Partial profit-booking may be prudent before election results

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

The so-called "rally of hope" stuttered during the week as Indian markets turned volatile. The Nifty closed at 6695, down 1.30 percent. The fear of the El Nino effect and the IMD forecast of below-normal rainfall seems to have made investors cautious.

With election results two weeks away, investors need to take a stand in the next few days. Although there can be a number of outcomes, only two would be termed positive for the markets - a landslide victory or a comfortable majority to form a stable government. The other scenarios such as a fractured mandate, a third front coalition or a weak UPA or NDA coalition would deflate the sentiment built up till date as the markets have already discounted a favourable outcome.

from Expert Zone:

India Markets Weekahead: ‎Ride the election rally but skim the profits

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

The market began the week on a high note after an extended weekend but could not sustain the rally due to profit booking. The Nifty was at a high of 6570 on Tuesday but the rest of the trading days remained lackluster and it ended the week with a marginal loss - at 6495 after the extended trading session on Saturday.

Although the week was marked with heightened political activity as candidates for the general election were announced, the U.S Federal Reserve had a sobering effect on the markets. The Fed decision to continue with further tapering of $10 billion and focus on interest rates, which should start rising sooner than expected, saw corrections in most markets as the dollar strengthened.

from Expert Zone:

India Markets Weekahead: Markets move into pre-election rally

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

A spectacular rally in the last few days has put the market in a pre-election mode, buoyant with hopes of a stable and reform-oriented government. Led by institutional buying and the resultant short squeeze, the markets rallied more than 3 percent in the last two trading sessions - closing the week at 6526, a record high for Nifty. The markets seemed to have moved into a new territory with metals, realty, banking, capital goods, infrastructure and energy sectors participating in the rally.

 Generally, the data points for a pre-election rally are the developments on political activities and opinion polls. The economic data takes a backseat in this “rally of hope” and markets take a keen interest in electoral analysis.

from Expert Zone:

India Markets Weekahead: Markets back on track for pre-election rally

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

The week started on a sombre note but with institutional activity picking up, the Nifty closed with gains of 1.97 percent at 6276 despite a mid-week trading holiday. Political activity also gained momentum with 11 parties coming together to form a Third Front to oppose both national parties.

 

The Election Commission may announce election dates in the coming week -- the code of conduct coming in will halt any policy decisions.

from Expert Zone:

India Markets Weekahead: Time to size up portfolio

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

After a scare earlier in the week, the markets showed resilience at lower levels and bounced back, showing the confidence of participants. Though Nifty closed 26 points lower for the week at 6063, sentiment was much better than the previous week.

from Expert Zone:

Interest rates likely to remain high

(Rajiv Deep Bajaj is the Vice Chairman and Managing Director of Bajaj Capital Ltd. The views expressed in this column are his own and do not represent those of Thomson Reuters)

The Reserve Bank of India (RBI) raised its benchmark repo rate by 25 basis points to 8 percent at its policy review meet in January. The reverse repo rate rose to 7 percent while the bank rate and marginal standing facility rate climbed to 9 percent. This is the third hike in repo rate since RBI Governor Raghuram Rajan assumed office in early September.

from Expert Zone:

Why the RBI raised interest rates

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

The Reserve Bank of India (RBI) raised interest rates at its review on Jan 28. The justification usually given for doing so is inflation.

But at its previous review, when inflation had soared, the RBI was passive and left rates unchanged. Now, with wholesale price inflation (WPI) slowing to 6.16 percent, the RBI was quick to raise the repo rate by 25 bps back to its highest level since the 2008 crisis. Why?

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