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India Markets Weekahead: Await a sharper correction to nibble in

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

The truncated week which opened after a five-day vacation was in a sombre mood except on Thursday, when markets bounced back due to a dovish Fed commentary. Friday again saw a correction, with the Nifty closing the week at 7860, down 1.07 percent.

People walk past the Bombay Stock Exchange (BSE) building in Mumbai May 13, 2014. REUTERS/Danish Siddiqui/FilesThe prospect of world economic slowdown perturbed international markets, and the Dow saw its worst week since May 2012, which in turn affected Indian markets. FIIs continued to pull out, increasingly worrying traders who are already baffled by the volatility.

The results season started off on a positive note with Infosys declaring better-than-expected profits and a bonus of 1:1. Although the stock rose 7 percent, it wasn’t enough to support sentiment in the rest of the market including the IT pack.

The automobile sales data for September continued to show an uptick while the HSBC PMI data for September was mixed, with services rising to 51.6 but manufacturing declining to 51.

The reform club

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

That custodian of the English language, the Oxford English Dictionary, describes a bubble as “anything fragile, unsubstantial, empty or worthless; a deceptive show”. Could this description apply to the current frenzy for “reform” that is seemingly sweeping the global economy? The answer is “yes, in part”. While there are some genuine attempts at reform, market expectations for reform will inevitably be disappointed in some parts of the world.

The global financial crisis has prompted politicians to advocate economic reform in two ways. First, the crisis demonstrated that the status quo needed to be changed — and in many cases that change required sizeable structural change. Second, as the structure of the world economy has changed (lower global capital flows, slower global trade, etc.) so economies have had to adapt the way that their economies are structured.

Invisible hand of market at work

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

India’s economic situation is at least grave, if not exactly in dire straits. Growth is at a decadal low, consumer inflation is persistently high, jobs have never been as scarce, the currency is volatile and the investment cycle is showing no signs of revival. Many of these problems are a result of bad policy and global economic conditions, but several are also the outcome of a natural economic cycle.

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