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Straight from the Specialists

Markets Weekahead: A decisive mandate for equities

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

Not even exit polls could have predicted the landslide election victory that ‎has put the BJP’s Narendra Modi in the driver’s seat for India.

The Nifty, after the initial euphoria of a 6 percent upswing, ended Friday at 7203, merely 80 points higher than the previous day. It was a typical “sell on news” phenomenon.

Hindu nationalist Modi gestures to his supporters during a road show in New DelhiThe clean sweep for the BJP has increased expectations from the new government and  does not leave room for excuses. The prime minister’s chair will test Modi’s ability to deliver on a national platform.

The next few days would be the honeymoon period and after the initial revelry,  people would closely watch the process of government formation and the new ministers who will take up portfolios such as finance, home, defence and external affairs. We would also need to see how Modi sets the framework for the revival of fast-paced economic development. It’s easier for him because of the decimation of various ruling governments at the state level.

Markets Weekahead: ‎Time to book profits and not be greedy

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

The highlight of the past week was a stupendous 3 percent rally on Friday with the Nifty ending at a record high of 6858. Investors were in a sombre mood earlier in the week, when the market was threatening to break a crucial support level around 6650.

The sudden turn on Friday and the ferocity of the move took most participants by surprise. It was a combination of fresh buying as well as short covering which resulted in a near 200 point rally. It seemed everyone wanted to join the bandwagon due to the fear of missing a bigger rally.

Is finance too competitive?

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The opinions expressed are his own

Many economists are advocating for regulation that would make banking “boring” and uncompetitive once again. After a crisis, it is not uncommon to hear calls to limit competition. During the Great Depression, the head of the United States National Recovery Administration argued that employers were being forced to lay off workers as a result of “the murderous doctrine of savage and wolfish competition, [of] dog-eat-dog and devil take the hindmost.” He appealed for a more collusive business environment, with the profits made from consumers to be shared between employers and workers.

Concerns about the deleterious effects of competition have always existed, even among those who are not persuaded that government diktat can replace markets, or that intrinsic human goodness is a more powerful motivator than monetary reward and punishment. Where the debate has been most heated, however, concerns the effects of competition on incentives to innovate.

Expectations from the RBI policy review

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

With more than 70 pct of the banking market in the grip of public sector banks (PSBs), who have a combination of constraints to lend freely, the Reserve Bank of India’s policy review amounts to almost a strategic push for these PSBs. Thus, the eagerness with which the policy review is awaited.

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