Expert Zone

Straight from the Specialists

Why FIIs are dumping India

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

The Indian stock market is in a tizzy as foreign institutional investors (FIIs) seem to have pressed the sale button. Securities and Exchange Board of India (SEBI) data shows that while there was a considerable slowdown in FII inflow in March, we are seeing an outflow in April.

While net FII inflow in the equity markets remained above $4 billion for each month between December 2012 and February 2013, the net inflow for March was reduced to $1.68 billion. The trend reversed and during April 3-10, there was a net outflow every day, with cumulative outflow of $269 million during this period.

The outflow in April is small as compared to the over $25 billion inflow during 2012-13, but the trend is unmistakable. The euphoria that was generated after the government announced a series of policy measures (touted as big-ticket reforms) from September 2012 onwards has slowly died down as the magnitude of triple deficit (fiscal deficit, current account deficit and governance deficit) intensified. Hardly any of the announcements bore fruit.

There’s still no light at the end of the tunnel for the land acquisition bill. FDI in multi-brand retail is still not a foregone conclusion and may yet face a roadblock when the budget session of parliament reconvenes.

India Markets Weekahead: Time to wait and watch

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

A volatile week saw the Nifty closing 0.45 percent lower at 5528 after disappointing numbers from IT bellwether Infosys, which missed expectations on most parameters. The Bangalore-based company’s results also affected other IT stocks, with a number of them closing lower.

The markets have again proved that the biggest challenge for industry leaders is to manage expectations. Infosys, which was given a big thumbs-up after spectacular December quarter results, was pushed back to levels from where it had earlier risen like a Phoenix.

Investment boost needed to break India’s vicious cycle

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

The current account balance reported last month hammered in the fact that India is spending more than it saves. While it had been stubbornly in the red for all but a couple of years in the last two decades, reaching a record deficit in both absolute terms and in relation to the gross domestic product was sobering.

The battle for patent protection

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

The Supreme Court verdict on Glivec brought to an end the battle by Swiss drugmaker Novartis to exclusively market the cancer medicine. In doing so, the bench enunciated a principle to justify a patent only by its intrinsic worth of innovation.

Word and deed must match in Xi Jinping’s Boao speech

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

Chinese President Xi Jinping’s maiden speech at the Boao forum is to be welcomed – but cautiously. The vision he has outlined of harmonious co-operation and co-existence among members of the global community has echoes of the 1954 Sino-Indian panchsheel (five principles of peaceful coexistence) agreement. History reminds us that the two Asian giants engaged in a brief border war in October 1962.

India’s privy purses and the Cyprus deal

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(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)

When the Indian republic took shape, the erstwhile maharajas and princes were granted privy purses. These were allowances which varied based on the size of their state and the revenue it generated.

Third-party motor insurance premiums fixed for new financial year

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

A motor insurance policy consists broadly of two parts — third-party cover, which is regulated; and an ‘own damage’ cover, the premium for which is left to market dynamics.

The premium for ‘own damage’ cover, which forms the larger chunk of the insurance premium, is based on risk and competitive pressures.

Low-key outcome as Singh meets Xi on BRICS sidelines

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

The BRICS summit in Durban last week, which brought the leaders of Brazil, Russia, India, China and South Africa together, is best recalled for the rich visual imagery that Russian President Vladimir Putin invoked. Putin suggested that the five countries were like the lion, elephant, buffalo, leopard and rhinoceros. Notwithstanding the normative vision for the developing world that was outlined by the leaders, the subtext is a logical extension of this animal metaphor.

India’s IP growing pains

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

As it celebrates its 65th year as an independent country, India seems poised for an economic take-off. Already, this south Asian country is the world’s largest democracy, has about the same number of middle-class citizens as the United States, and has the planet’s tenth largest economy.

But India still has a long way to go. An average citizen lives on less than $10 a day and its per-capita gross domestic product is less than half that of the other Asian giant, China. For India, moving to the next level is going to require a potentially painful but absolutely necessary engagement with the global economy.

The stock market’s delayed response to Budget 2013

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

Finance Minister P. Chidambaram tried to humour the market in his budget by cutting the Securities Transaction Tax (STT) which had been one of its sore points. But the market was not amused. The Sensex continued to slide, indifferent to the budget which was presented with a lot of expectations.

This appears to be rather strange because the budget was well received by the industry, in spite of the increase in surcharge from 5 to 10 percent. It was possibly the realization that the finance minister lived up to his promise of cutting fiscal deficit to 4.8 percent which created an infectious confidence in growth revival.

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