(Nipun Mehta is Executive Director & Head - India, SG Private Banking. The views expressed here are his own)

At a Sensex level of around 17,000, are the Indian equity markets looking at the face of a possible bubble in the offing? Terrifying words, probably unjustified for a market which is still 20 percent lower than its all time peak touched in Jan 2008. Let’s look at it from different perspectives.

In the Indian equity markets, unlike in other global markets, it is commonly believed that the day the roadside vendor starts giving ‘tips’ or the day cheerleaders with pom-poms start appearing on business channels, the top is near.

This time however, we have not yet seen any of this fanfare amongst investors or business commentators. There is hence little reason to believe that a retail investor driven bubble is on the horizon. Nowhere close to it actually, since there has been very little retail or high net worth individual (HNWI) participation in the rally of the last 9 months.

What has clearly driven the markets are the Foreign Institutional Investors (FIIs) who have pumped in close to $7.4 bln in India in the last quarter raising their ownership to close to 19.2 percent up from 18.3 percent in the previous quarter. As per statistics available, FII ownership is also up by 2.5 percent from the March 2009 figure of 16.7 percent.

A large part of this is contributed by the dollar carry trade whereby FIIs raise funds at ridiculously low interest rates in dollars and invest it into a stronger currency viz INR. In the process they gain not just by the rising equity markets but also by the strengthening INR against $.

This is clearly similar to the Yen carry trade that happened earlier (whereby borrowings were in Yen at negligible interest rates) and which burst when the Yen — a strongly controlled currency — suddenly started strengthening. Can dollar carry trade stop? Can a similar bubble be building up in the $ carry trade as well?

Clearly the dollar carry trade can stop if interest rates in the U.S. rise. Can it happen in the short or medium term? Appears quite unlikely given the state of the U.S. economy and the statements the Fed has made in the recent past.

On the other hand, can the $ start appreciating enough for the stock market gains to be eaten away by a strengthening dollar? At least in the immediate term, this too appears unlikely. Considering the huge trade deficit, the Fed needs to ensure a weak dollar in order to encourage exports.

Effectively, there does not appear to be any bubble building in the Indian equity markets. What can however puncture the rally are the FII allocations to the emerging markets/India being realigned in January 2010 or the FIIs withdrawing big time under instructions by concerned central banks to use the borrowed funds for lending/investing within their own countries as opposed to help India or the emerging markets to benefit. Does that look possible?

(You can e-mail Nipun Mehta at: nipun.mehta@sgprivasia.com)

The Indian government has reiterated its refusal to reduce carbon emissions under any new global deal to fight climate change.

The Times of India reported this week that Environment Minister Jairam Ramesh wrote to Prime Minister Manmohan Singh urging him to accept curbs on India’s rising carbon emissions without insisting they should hinge on new finance and technology from rich nations.

While such a possibility was seen by Western negotiators as potentially helping in getting agreement on a global deal in Copenhagen in December, Ramesh was accused in the Indian media and by opposition political parties of hurting the interests of India.

But Ramesh said on Tuesday India was not going to accept internationally legally binding emission reduction targets, though it was prepared to discuss and make public periodically the status of its domestic climate action.

Should India agree to reduce carbon emissions under a global deal to fight climate change? Or should it ask rich nations to fulfil their commitment to give developing countries finance and technology to fight climate change?

The feud between the billionaire Ambani brothers became public in 2004, and still drags on.

On Sunday, Anil Ambani issued a statement expressing his willingness to end the bitter feud with elder brother Mukesh.

Anil Ambani has taken the support of the media to convey his side of the story.

Through a series of front-page advertisements in major Indian newspapers, Anil recently accused the Petroleum Ministry of taking the side of Reliance Industries.

Earlier in July, he used an annual shareholders’ meeting to lay into his elder brother and the government.

Reliance Industries has welcomed the move by Anil, but said the dispute under litigation was not merely a family matter and hoped “any overtures for rapprochement are in no way related to the ongoing hearing of the case”.

Media reports say Mukesh’s Reliance Industries may not trust Anil’s word after their recent media campaign.

Are you surprised by Anil’s move? Do you think it can help put an end to the Reliance corporate battle?

(UPDATE: Kirsten on Friday denied having any role in  drafting the document and said he was deeply hurt by the quotes being attributed to him)

Coach Gary Kirsten is encouraging the Indian cricket team to have sex to boost their performance in the ongoing Champions Trophy tournament in South Africa, a newspaper reported.

Kirsten put down his thoughts on dietary habits, exercise and the benefits of sex in a document handed over to team members, Hindustan Times said this week.

This is not the first time cricket coaches have resorted to unusual methods to help their teams on the field.

During the 2001 Ashes tour, then Australia coach John Buchanan drew on the teachings of Chinese military strategist Sun Tzu — even sliding copies of ‘The Art of War‘ treatise under the doors of cricketers’ hotel rooms.

Former Indian coach Greg Chappell adapted Edward de Bono’s ‘six thinking hats‘ method to prepare his team for important games.

Sexologists approve of Kirsten’s advice, although several athletes and footballers over the years have been asked to abstain from sex before competitive events.

In a country where sex education is still taboo, will Kirsten’s “have sex” document raise moral hackles. More importantly, will it help Team India win matches?

About a year ago, investment banking giant Lehman Brothers collapsed into bankruptcy after the U.S. administration refused to support a bailout. The bust triggered a dangerous domino effect which rocked world markets as people’s faith in the financial system plummeted and forced businesses to cut production as recession started taking roots.

The shock waves were felt in India too - the benchmark Sensex fell more than 50 percent in 2008, exports plunged and companies had to resort to ruthless down sizing to weather the crisis.

Reuters India plans a series of stories and analyses on how the world economy has been rebuilding since then. We would like you, our readers, to use the comments section below to share your experiences of the past year.

The Bharatiya Janata Party (BJP) on Wednesday expelled former finance minister Jaswant Singh from its primary membership for praising Pakistan founder Muhammad Ali Jinnah in a book.

The decision to expel Singh came after the release of his book “Jinnah - India, Partition, Independence” which the BJP said went against the party ideology.

As a visibly upset Singh, a founding member of the party, questioned the decision, the latest controversy to hit the BJP seems to have brought its internal conflicts out in the open.

Many pressing issues haunt the party as it begins its ‘Chintan Baithak’ – an annual brainstorming session.

The BJP was drubbed at the 2009 general election and faced a leadership crisis. Its elderly leaders are perceived as being out of sync with a young vote base and it has had an ideological falling out with its Hindu right-wing parent.

The BJP may need to take a hard look at these issues if it hopes to reinvent itself.

Singh’s book and its fallout have led some liberal thinkers in politics to question the wisdom of meting out punishment to an individual for expressing a personal opinion especially since larger issues like revamping the organizational structure of the party and its revival need to be addressed.

It is ironical that the controversy over Singh’s expulsion happened on the day the BJP top brass met in Shimla to chart out its future course of action after a dismal showing in the general election.

Do you think the expulsion of Singh, a veteran national level leader with a career spanning three decades, is yet another example of the BJP losing the political plot? Will it be able to resurrect itself in time for the next election?

Bollywood star Shah Rukh Khan was en route to Chicago for a parade to mark Independence Day when he was detained and questioned at Newark airport.

After a couple of hours’ interrogation, the 43-year-old actor was allowed to make a call, getting in touch with the Indian consulate who vouched for him and secured his release.

The incident sparked uproar among Khan’s fans in India, who vented their anger over the Internet and in protest marches.

This is not the first time an Indian celebrity has had trouble with U.S. immigration officials and security checks.

Last month, U.S-based carrier Continental Airlines apologised to former Indian president A.P.J. Abdul Kalam for frisking him at New Delhi airport.

On Saturday, Information Minister Ambika Soni said while she could not say if Khan had been detained “on religious grounds, there have been too many instances like these in the U.S. concerning Indians”.

A Times of India report on Sunday said U.S. officials feel some Indian visitors are “needlessly huffy about routine security procedures and there is a broad cultural mismatch”.

Are Indians overreacting? Or is the U.S. taking things a bit too far?

Khan is a celebrity but what about ordinary Indians who travel to the U.S. — do they face racial profiling?

With the number of swine flu fatalities in India touching double figures on Tuesday, panic is slowly setting in.

Schools, malls and cinema halls in Pune are already shut and nearly a thousand people across India have tested positive for the virus.

The H1N1 flu outbreak, declared a pandemic on June 11, has spread around the world since emerging in April and could eventually affect 2 billion people, according to WHO estimates.

But is India ready to tackle the outbreak?

More supplies of flu drug Tamiflu and testing kits are being imported and private hospitals are being asked to help state-run hospitals cope with a surge in people rushing to get tested.

Some also feel that the media hype over swine flu is causing needless fear.

On Tuesday, the Hindustan Times said the common flu could be killing an estimated 572 Indians every day, much more than H1N1 flu — in most cases, infection has been mild and patients have fully recovered.

So is there really cause for panic?

(C. Uday Bhaskar is a New Delhi-based strategic analyst. The views expressed in this column are his own)

Yet another Hiroshima Day will be observed on August 6 with grave solemnity in Japan but few other parts of the world will mark the mushroom day of August 6, 1945 with the deep concern it ought to receive.

Sixty-four years after the apocalyptic destructive potential of the atomic bomb was recognized, it may be posited that the global community is less secure apropos the nuclear domain with every passing day.

While Myanmar is now perceived to be the latest potential member of the nuclear  weapon ‘club’, the overlap between state and non-state entities who are contributing to covert nuclear  proliferation remains as opaque as it has been for well over three decades.

The highly publicized but little investigated A.Q. Khan episode that irrefutably pointed to a clandestine nuclear Wal-Mart has been swept under the carpet since it did not serve the realpolitik compulsions of the major powers – and this includes some of the non-weapon states who are prominent members of the Nuclear Suppliers Group.

While U.S. President Obama is publicly committed to global nuclear disarmament – but recognizes that it will not occur not in his lifetime – and former American Cold War stalwarts led by Henry Kissinger advocate the ‘cause’, the reality in the strategic grid of the world is stark.

The most comprehensive estimate of the global nuclear arsenal places the current stockpile (as of June 25, 2009) at 23, 335 warheads. Of these, more than 8,000 are deemed to be operational.

India, which was always in the vanguard of the disarmament debate became a reluctant nuclear weapon power in May 1998 and is now reviewing its options as a state with nuclear weapons.

With the launch of the ARIHANT on July 26, it is now committed to acquiring a nuclear deterrent at sea – the invulnerable ‘second-strike’ capability. Welcome to the global nuclear reality on Hiroshima Day.

While nuclear deterrence strategy and practice is averred to be cast in stone – a tenet inherited from the menacing Cold War decades – the global nuclear environment is brittle, sullen and uncertain.

Adversarial dyads are bristling and the US-Russia divergence over missile defences is case in point.

States with nuclear weapons including those with nascent arsenals, non-state entities that have extreme revisionist agendas and the inevitability of the permeation of knowledge through the ever growing global technological advances have only added to the complexity of the nuclear challenges that now abound.

Many commendable non governmental initiatives have been mooted over the last decade in different parts of the world and a sturdy set of detailed reports and recommendations are now available.

Yet no significant state level policy-shift has been made – except for the rhetorical commitment that is made – the most well-known being that of U.S. President Barack Obama.

No state that has the nuclear weapon capability – or the ostensible protection this WMD provides – is willing to forsake it unilaterally. This reliance on the ‘nuke’ is an indicator of the insecurity index of the security planners worldwide and it is instructive that even Japan is unable to move out of the US nuclear umbrella – let alone an Australia or UK.

The case for a blue ribbon Global Nuclear Convention that distils all the available reports and assessments and objectively suggests the way ahead is imperative. The nuclear doctrine, strategy and related operational posture of  nuclear weapon states needs to be reviewed and the non-state entity with its  tangled  tentacles candidly identified  - along with the many red herrings that have been deliberately strewn.

It is prudent to recall that even as some constituencies reflect over the enormity of   Hiroshima Day – as many as 2,200 American and Russian warheads are on high alert and ready for ‘launch on warning’ use.

Such irrefutable empirical reality can lead to cynicism – but this should not be devoid of hope - that the Holy Grail of total disarmament is elusive but we must persevere.

The Reserve Bank of India (RBI) announces 2009/10 fiscal’s first quarter monetary policy on July 28 and most analysts and traders expect it to leave key rates unchanged.

India’s economic outlook is mixed as a weak monsoon could dampen signs of nascent economic recovery, food prices are soaring even though headline inflation is benign and the borrowing programme is huge despite ample cash conditions.

The RBI has already cut the repo rate, or its key short-term lending rate, by 425 basis points to 4.75 percent in six steps since October 2008 as it tried to guard a slowing economy against the global financial crisis.

Should the RBI cut its key lending rates further?