Expert Zone
Straight from the Specialists
Indian markets stuck in a rut
(The views expressed in this column are the author’s own and do not represent those of Reuters)
It’s now been close to four years since domestic and global financial markets have been in a state of flux, plagued by uncertainty, as a slowdown ensures that government after government revises its growth forecast downwards.
The IMF, the rating agencies and the entire tribe of analysts have been either on a rating downgrade spree or have substantially revised growth projections of economies across the globe. Governments globally, on the other hand, have been splashing around to stay afloat by announcing policy measures or financial subsidies to support their economy, or have been just sitting around doing virtually nothing, like in India.
While the consumption story and the sheer weight of the FII fund inflow into the capital markets continues to support the Indian equity markets, concerns within the domestic economy abound. Coalgate, 2G, GAAR, rising crude oil price, continuation of huge petroleum product subsidies leading to a huge fiscal deficit and leaving the largest petroleum companies in India bleeding under the burden of losses, high levels of inflation, high interest rates eating into company profits and preventing revival of the investment cycle, complete lack of will to undertake policy reforms, unheard of levels of corruption, a continuing logjam in parliament due to Coalgate, the list is endless. All this has led to the impending threat of a further downgrade of the Indian economy — virtually to junk status.
GAAR-supported bounceback tough to sustain
(The views expressed in this column are the author’s own and do not represent those of Reuters)
A reversal after four weeks of gains saw the Nifty closing 2.38 pct lower at 5258. The mid-cap segment of the market caved in earlier with the large caps holding fort till Thursday. The Parliament logjam continued on the “Coalgate” issue and hopes of any worthwhile business being conducted in this monsoon session are dim. Given the political scenario, the war-rooms of political parties are getting into election mode, which could be earlier than 2014. This too will hardly raise hopes for Indian markets as the electorate seems too fractured to have a strong government which would have the ability to push through reforms, including non-populist ones.
Challenging times but hopes of recovery after 2014 polls
(Rajan Ghotgalkar is Managing Director of Principal Pnb Asset Management Company. The views expressed in this column are his own and do not represent those of either Principal Pnb or Reuters)
These are possibly the most challenging times for India because, simply put, every goal post seems to be oscillating.
Liquidity reigns supreme as market ignores data points
The Nifty crossed 5350 levels last week after nearly three months with strong buying by FIIs, closing about two pct higher at 5320. Stronger than expected U.S. payroll data, positive cues from the euro zone and comments from Finance Minister Palaniappan Chidambaram assuring to unveil a path of fiscal consolidation and undertake remedial measures to revive the domestic economy, boosted investor sentiment.
However, negative IIP data along with weak corporate results disappointed the markets in the latter half of the week, causing the indices to trim some of the earlier gains.
What money can buy
By Raghuram Rajan
The opinions expressed are his own
In an interesting recent book, What Money Can’t Buy: The Moral Limits of the Market, the Harvard philosopher Michael Sandel points to the range of things that money can buy in modern societies and gently tries to stoke our outrage at the market’s growing dominance. Is he right that we should be alarmed?
While Sandel worries about the corrupting nature of some monetized transactions (do kids really develop a love of reading if they are bribed to read books?), he is also concerned about unequal access to money, which makes trades using money inherently unequal. More generally, he fears that the expansion of anonymous monetary exchange erodes social cohesion, and argues for reducing money’s role in society.
Overseas cues to drive the market but limited upside
A positive week for the markets saw volatility in a narrow band with Nifty gaining about 115 points to close at 5216, a gain of about 2.25 pct. The midcaps and small caps outperformed the frontline stocks indicating retail interest.
FIIs continued with their buying spree lapping up about US$ 535 million worth of stocks. The new finance minister Palaniappan Chidambaram was given a thumbs up but expectations of any radical move are low especially after the disappointment from Prime Minister Manmohan Singh in the last fortnight.
Why the RBI preferred an SLR cut
(The views expressed in this column are the author’s own and do not represent those of Reuters)
The first quarter review of monetary policy did not create any ripples. The stock market remained flat and investors and consumers showed little interest. That was because RBI Governor Duvvuri Subbarao had made enough noise earlier that the time was not right and conditions were not suitable for a rate cut.
Not so easy for India to come out of the dark
(The views expressed in this column are the author’s own and do not represent those of Reuters)
Many words have been used to describe the power outages that put half of India in the dark this week: embarrassing, catastrophic, the worst the world has seen. While all of these may be true, the blackout also embodied the dire situation the country could be headed to without the necessary reforms to modernise its economic infrastructure. To be sure, it is not a lack of vision that would lead India to similar potential disasters in the future, but a lack of political will.
Selling insurance through kirana stores
(The views expressed in this column are the author’s own and do not represent those of Reuters)
India is considered to be a large untapped market for insurance products. There seems to be enough scope for improvement on the insurance density and insurance penetration counts for the country. While this is true, the challenge lies in reaching out to the large population in the rural areas where the traditional financial distribution channels just don’t make economic sense.
Hopes fade as investors await concrete action
(The views expressed in this column are the author’s own and do not represent those of Reuters)
It was an action-packed week for the markets but not for the reasons we had anticipated. Manmohan Singh’s government, which was expected to announce a string of policy action steps starting with a diesel price hike, failed to make any announcements which would have cheered markets.
