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Straight from the Specialists

India Market Weekahead: Time to take some profits off the table


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

A rally of hope tempered by caution pushed the Nifty 1.2 percent up to 6,776 for the week. Investors believe the worst is over and a new government would be the catalyst for a sustained economic upturn. In election season, hope for a better tomorrow helps the market ignore ground realities.

A record turnout in the ongoing general election is being seen as an anti-incumbency vote. As the market continues moving up, investor hopes for a stable government get priced in, leaving hardly any room for a disappointment. On the other hand, fence sitters who got left out of the rally will join the fray, adding to the momentum already built by investors.

Although we have not seen all-round euphoria, it is distinctly visible in certain pockets. Some Gujarat-based groups have seen a stupendous increase in market capitalization.

Adani Group stocks have rallied between 35 percent and 120 percent in about two months. Gujarat Gas jumped about 62 percent in a month, with most of the gains accruing in the last week. A long list of stocks — such as Arvind, Gujarat Mineral Development Corporation, Gujarat Pipavav Port, Pipavav Defence, Gujarat Alkalies, Torrent Power — have climbed on investor expectations.

Steps the next government should take


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

India’s economy is tottering, inflation is too high and growth too low. The Congress-led UPA government allowed the economy to drift during its second term. Why? Because it did not focus on real issues, failed to govern effectively and did not carry out any significant reforms.

New legislation became almost impossible, with coalition partners such as the TMC and DMK threatening to pull out (and they eventually did). On top of that, successive scams made it impossible for the government to function normally.

India Market Weekahead: Ride the election rally with some caution


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

The Nifty touched a high of 6758 during the week, part of a market rally for 10 consecutive sessions – the longest streak in five years.‎ An overdue correction set in towards the end of the week with the Nifty ending flat at 6694.

Advance-decline data suggests that interest is shifting to the small and mid-cap space where advances outpaced declines. Although we are touching new highs, the missing euphoria indicates investor caution  that is good for the health of the market.

The election question


(This piece comes from Project Syndicate. The opinions expressed are the author’s own)

With street protests roiling democracies from Bangkok to Kyiv, the nature and legitimacy of elections are once again being questioned. Are popular elections an adequate criterion by which to judge a country’s commitment to democracy? Beginning next month, elections in Afghanistan and India will throw this question into even sharper relief.

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.

How much inflation is good for growth


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

The RBI has left it to the government to decide the inflation target since it considers it politically sensitive. The central bank will accordingly modulate its monetary policy to ensure that the government’s target is not exceeded.

Targeting inflation alone cannot be the sole objective of monetary policy, though it is an important criterion for regulating the repo rate. Even developed countries have concerns about inflation – when it is too low or too high.

Health insurance sector poised for more growth


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

With the arrival of Cigna TTK, there are now five standalone health insurers offering products and services in India. Religare Health is also a recent entrant that started operations only last year.

At a time when we are seeing several exits in the life insurance sector, this is an indicator of the growth potential in India’s health insurance sector.

India’s democratic pageant


(This piece comes from Project Syndicate. The opinions expressed are the author’s own)

Last week, India’s independent Election Commission announced the dates for the next general election. The world’s largest single exercise of the democratic franchise will take place over a staggering 37 days in nine “phases,” some a week apart, from April 7 to May 12. Some 814 million eligible voters will elect, for the 16th time, a new parliament and government, casting their ballots at more than 930,000 polling stations — after choosing from an estimated 15,000 candidates belonging to more than 500 political parties.

Is the current euphoria in equity markets justified?

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

The third-quarter results season corroborates my view that 2014 will be a year of fragile recovery for the Indian economy. Fragile, I reiterate.

The market, however, has run up to an all-time high, with the Nifty breaching the psychological barrier of 6,500. Is the euphoria justified?

How election years affect the stock market

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

The ongoing stock market rally has been primarily supported by foreign investors. The rupee also rose to a near three-month high against the dollar on Friday.

It is rather unusual for the Indian market to jump in pre-election months, particularly after 1996 when coalitions became the new political strategy to make up for shortfalls in parliamentary majority. In most election years, the market had actually fallen just before the elections – in 2004, by more than 10 percent.

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