Expert Zone
Straight from the Specialists
India Markets Weekahead: Tough for Nifty to climb above 7,800
(Any opinions expressed here are those of the author and not of Thomson Reuters)
Indian markets were unaffected by the week’s international developments, with some help from encouraging domestic macro data and a pep talk by Finance Minister Arun Jaitley in post-budget discussions.
The Nifty recovered from the previous week’s losses, closing 2.67 percent up at 7664. Positive IIP data was followed by benign inflation at 5.43 percent, a four-month low. Monsoon rains, which had been playing truant, recovered substantially with the deficit shrinking to 15 percent below average last week and covering the entire country.
The geo-political tension in west Asia as well as the shooting down of a civilian aircraft in the war-torn region of Ukraine did not affect Indian markets though the U.S. and European markets reacted adversely.
Prime Minister Narendra Modi earned a feather in his cap when he negotiated for an Indian to be the first president of the $100 billion BRICS Bank. It is expected that this would supplement government spending in the Indian infrastructure sector in the next two-three years.
When are house prices a worry?
(Any opinions expressed here are those of the author and not of Thomson Reuters)
As I speak with a relatively recognizable British accent, travelling by taxi in many Asian countries has become something of a trial in recent years. Whenever my nationality is recognized, I am (courteously) asked for my views on the London property market, and where to buy. In a world of low interest rates, property has become increasingly fashionable, and somehow housing advice delivered in a British accent has become highly sought after.
Property prices in London are now over 30 percent above their pre-crisis level. For the rest of the UK, house prices are now back where they were before the onset of the economic crisis (it should be noted that the economy is around 13 percent larger in nominal terms over the same period, so the house price to GDP ratio has fallen for the country as a whole). In the United States, house prices have yet to regain their pre-crash levels, but they are up 20 percent from their lows. Even in the Euro area, not an economy noted for its vibrancy, German property prices are 10 percent higher than they were before the crisis.
Budget strikes the right chord on reviving investment
(Any opinions expressed here are those of the author and not of Thomson Reuters)
Patient, consistent baseline play rather than aggressive serve and volley — that about sums up the Narendra Modi-led government’s maiden budget.
Budget 2014 is only the first step
(Any opinions expressed here are those of the author and not of Thomson Reuters)
Much was expected from Budget 2014/15 without realizing that India’s economy has its own rhythm, which changes only by small degrees if left to itself. That is why big-ticket reforms are necessary to quicken the pace. Finance Minister Arun Jaitley had reason to move forward with caution and make changes only at the fringes.
No wonder then that P. Chidambaram almost welcomed the budget as if it was a carryover from his own budget. Even the increase in shareholding by foreign investors in the insurance and defence sector, which Jaitley has announced, had been on the previous government’s agenda. Now that the opposition has shrunk, the Modi government took the first opportunity to do that, though with conditions.
Budget 2014/15 reveals priorities, sets the stage
(Any opinions expressed here are those of the author and not of Thomson Reuters)
The new Narendra Modi government rides on a long wishlist of policies and reforms, with limited resources. Budget 2014/15, as expected, reveals the government’s priorities in the near and medium term.
The inflation moderation imperative overshadows near-term headline growth desires, manifested in aggressive (albeit challenging) fiscal deficit targets. The projected fiscal deficit of 4.1 percent (3.6 percent of GDP in FY16) versus the 4.6 percent recorded in FY14, is in line with expectations. The reduction in the budget deficit is driven by hoped-for revenue growth rather than depressed spending growth.
India Markets Weekahead: Book out of high-beta stocks
(Any opinions expressed here are those of the author and not of Thomson Reuters)
The Narendra Modi government presented its maiden budget on Thursday. Although the budget was welcomed by industry leaders, the market meltdown seems to be telling a different story, with the Nifty posting its biggest weekly loss in 15 months.
Should it have been a path-breaking budget or is it prudent to build the economy brick-by-brick by walking the middle path? The much hyped “bitter pill” turned out to be a “bland” one.
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)
India 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.
Modi’s first budget can be a great start
(Any opinions expressed here are those of the author and not of Thomson Reuters)
There are few opportune moments for a nation to enact bold economic reforms. For India, this week is one of them as Prime Minister Narendra Modi and his Bharatiya Janata Party (BJP) government unveil their first budget since sweeping to power in a landslide victory last May.
India needs the sort of shock therapy it administered in response to the 1991 crisis when foreign exchange reserves had dropped to just $1 billion. While current circumstances may be less urgent, they are no less critical. Economic growth has dropped to the 4-5 percent range, half the peak level of a decade ago. Inflation has risen between 9 and 11 percent over the past five years, crippling consumer purchasing power.
India’s Iraq problem
(This piece comes from Project Syndicate. The opinions expressed are the author’s own)
Iraq seems to be falling apart, with the rapid advance of the militant Islamic State in Iraq and Syria (ISIS) threatening to lead to the country’s division into Shia, Sunni, and Kurdish entities, while blurring its border with its turbulent western neighbor. Moreover, the tumult is now threatening to spread to two more nearby countries, Afghanistan and Pakistan, which already are facing myriad internal challenges. For India, the message is clear: its national security interests are at risk.
India Markets Weekahead: Correction could follow budget week
(Any opinions expressed here are those of the author and not of Thomson Reuters)
Last week’s robust pre-budget rally belied expectations, with the Nifty closing up more than 3 percent at a record high of 7,751. Automobile sales, manufacturing PMI as well as services PMI showed an uptick. The Iraq turmoil seems to have taken a back seat with oil prices receding from a nine-month peak. A rally in world markets, with life highs for the DJIA and S&P 500, also aided sentiment.
India’s fiscal deficit in the first two months has already touched 45.6 percent of the full-year target. Though this would have been a negative indicator, the markets welcomed Finance Minister Arun Jaitley’s remarks about focusing on fiscal consolidation against “mindless populism“.
