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India Markets Weekahead: It’s time again for an election year ‘rally of hope’

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

Despite a volatile Friday, it was a good week for the markets and saw the Nifty close about 90 points higher at 6,261, with sentiment supported by better-than-expected quarterly results and benign inflation data.

The few earnings that disappointed investors seemed to affect specific stocks without having a bearing on either the sector or the markets.

Politics took centrestage last week with the All India Congress Committee anointing Rahul Gandhi as campaign leader for general elections this year. The Bharatiya Janata Party, led by Gujarat Chief Minister Narendra Modi seemed to be in hibernation, possibly preparing a fresh strategy after the Aam Aadmi Party’s strong showing in the Delhi state elections.

With just about two months before the financial year ends, Finance Minister P. Chidambaram is on an overdrive to ensure he sticks to his promise of maintaining fiscal deficit below 4.8 percent of India’s GDP. Though the Powergrid FPO was a success, the proposed divestment in Indian Oil was blocked by a ministerial panel. The divestment in Hindustan Zinc, through an auction, would also be important to achieve the finance minister’s target.

Time to ride the rally in the run-up to 2014 elections

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

Election fever in the world’s biggest democracy is gripping India in the run-up to general elections due in 2014. In the coming months, politics will be in focus especially among investors.

Assembly elections in Chhattisgarh, Delhi, Madhya Pradesh and Rajasthan were a prelude to next year’s election. The four states make up 72 seats in the Lok Sabha. Historical data suggests the electorate votes on the same lines for the Lok Sabha in case state polls are held within 12 months of the general elections.

India Markets Weekahead: Lack of positive triggers in the near term

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Indian markets are in a corrective phase after RBI Governor Raghuram Rajan’s monetary policy review on Sept. 20 put a damper on investor expectations. If Rajan had played to the galleries, we would have seen a stock market bubble. The move from pessimism to euphoria — a rally of nearly 20 percent in less than three weeks — without any perceptible change in ground realities, would have led to a bull trap. Though participation levels were not high, FIIs had turned buyers and it would have been a matter of time before dormant market participants jumped into the fray.

Barclays is the latest to cut India’s GDP forecast to 4.7 percent. Most of the others have cut their forecast to below 5 percent although the government is still hoping for an early recovery. The banking sector was under pressure after Fitch cut its rating for a number of public sector banks such as Punjab National Bank, Bank of Baroda and Indian Bank.

India Market Weekahead – Volatility expected ahead of RBI policy review

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After a rally of 500 points on the Nifty, markets consolidated at slightly higher levels to close at 5850 this week. It’s evident that hope keeps the market ticking — this time it was various measures by the new RBI governor, Raghuram Rajan,that cheered the markets.

But expectations, at times unrealistic, could lead to disappointment. Though Rajan made the right moves, it would be interesting to see how he uses the limited manoeuvrability he currently has. The monetary policy review on September 20 would be closely watched.

India Markets Weekahead: Cash is king

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

Around mid-week, the Indian markets seemed akin to a sinking ship which saw unabated selling with Nifty hitting a low of 5,168 on Wednesday, before recovering sharply to close the week at 5,471 on the hopes of concrete action by the government to shore up the sentiments and the Reserve Bank of India’s moves to save the rupee.

The street expected structural reforms from the government to tackle this crisis whereas the textbook solutions of the RBI and the government backfired. The rupee cracked to touch 69/dollar, but recovered to close the week at 66.55.

India Markets Weekahead – An opportunity for investors

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Indian markets were down for a third consecutive week with the Nifty closing 2 percent lower at 5565 on weak economic signals and disappointing corporate results.

The rupee held on at 60.67 to the dollar.

The appointment of Raghuram Rajan as the next governor of the Reserve Bank of India (RBI) brought the market some cheer. Rajan, a former chief economist at the IMF, is seen as a pro-growth policymaker.

India Markets Weekahead: Volatility to continue in results season

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

After a spirited rally the previous week, the Nifty moved in a band of 150 points between 5750 and 5900, ending with modest gains of 0.53 percent at 5868. It may seem small but the extreme volatility within this band caught traders on the wrong foot.

Time and again, markets prove that predicting them in the short run is hazardous. Investors welcomed the government’s bold decision to increase gas prices but reacted negatively to its ordinance on the food security bill. The already weak rupee cracked further to 60.35 against the dollar as the election gimmick could cost the state exchequer over $20 billion.

India Markets Weekahead: A spirited rally may be a distant dream

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

The week began with the Reserve Bank of India (RBI) maintaining status quo on rates as expected at its mid-quarter monetary policy review. The trade deficit widened to $20.14 billion, a seven-month high and up 13.18 percent over the previous month. Gold seems to be the culprit again and government restrictions don’t seem to deter Indians from buying gold.

The markets held on to hopes that U.S. Federal Reserve chief Ben Bernanke could bring cheer but the indication of a roadmap for a QE3 pullback saw the dollar rally against most currencies. The rupee was among the worst performers, falling close to 60 against the dollar.

India Markets Weekahead – Volatility seen as RBI policy review in focus

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Volatility is here to stay and trying to predict the markets on a daily basis is a futile exercise. It’s no better than tossing a coin.

Monsoon rains are early and heavier then normal, raising the hopes of green shoots in the next few months. Macro numbers were showing signs of bottoming out but the rupee slide has thrown calculations awry. A feeble request by the finance minister urging people to shun gold won’t do much good in a country enamoured by gold.

India Market Weekahead – Inflation, FII inflows to be key

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

The bulls are back and their four-week winning streak saw the Nifty close at a 29-month high of 6107 on Friday, up about 2.75 percent for the week. Liquidity flows remain robust, fuelling the momentum despite political heat in New Delhi.

The Congress win in Karnataka boosted positive sentiment, followed by industrial output data that was marginally better than expectations. The overall earnings season has been favourable and along with the global rally provided the right environment for the markets to cross the psychological barrier of 6100 in the Nifty and 20000 on the Sensex. The only thing missing is euphoria on the street and broader participation by investors.

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