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India Markets Weekahead: Time to lighten commitments as extended honeymoon almost over

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The past week was one of the most eventful post the general elections, and the action continued till Saturday with a landmark speech by Prime Minister Narendra Modi at the U.N. General Assembly and Tamil Nadu Chief Minister Jayalalithaa Jayaram being sentenced to four years in jail in a corruption case. Markets were volatile and the Nifty closed the week at 7,968, down 2 percent despite a recovery on Friday.

The week started on a positive note but weaker European manufacturing data and concerns about growth in China led the markets to crack.  The Supreme Court’s decision to charge a penalty as well as deallocate almost all coal blocks awarded since 1993 led to another bout of selling in power, metal and banking stocks.

The deferring of decision to raise gas prices was also viewed negatively by investors as the new government was expected to be quick and decisive. As markets were sinking further below 7,900 levels, a ratings upgrade of the country by S&P came as a shot in the arm, helping the Nifty to bounce back above 7,950.  The launch of “Make in India” campaign was hailed by industry stalwarts as a game changer, boosting sagging market morale.

People walk past the Bombay Stock Exchange (BSE) building in Mumbai May 13, 2014. REUTERS/Danish Siddiqui/FilesMaharashtra’s assembly polls in October is being viewed as an important event to judge Modi’s continuing popularity, especially following the BJP’s weak performances in recent by-polls. The Sena-BJP combine was expected to have a cakewalk due to anti-incumbency against the ruling Congress-NCP combine. But the breakup of both these coalitions could throw up unexpected results and new post-poll alliances. A weak Maharashtra government may not bode well for the industrialization story.

China’s WMD cooperation with Pakistan looms over Xi-Modi talks

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The visit of Chinese President Xi Jinping to India and his meeting with Indian Prime Minister  Narendra Modi this week has elicited considerable positive interest in both countries. It has the potential to recast the uneasy Asian strategic framework, and by extension the relations of emerging global powers that are currently clouded by acrimony and mutual mistrust.

India Markets Weekahead: Continue pruning your portfolio

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Markets began the week on an optimistic note with the Nifty touching a new high of 8,178 but fatigue was noticeable in frontline stocks as action shifted to the mid- and small-caps.

Where the growth in Q1 came from

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GA man walks his cow under high-tension power lines leading from a Tata Power sub station in Mumbai's suburbs February 10, 2013. REUTERS/Vivek Prakash/FilesDP growth of 5.7 percent in the April-June quarter was unexpected in view of the southward drift of India’s economy over the past two years. No wonder it pepped up the Bharatiya Janata Party-led government at a time when the ruling coalition is listing its achievements after 100 days in office. The question is where this growth came from and whether it will be sustained in future.

India’s economy has been slowing after achieving 9 percent growth three years ago. That was because the Congress-led government failed to fuel the economy. The absence of policy reforms, paralytic governance – combined with persistent inflation – discouraged investment. Growth tapered to 4.7 percent last year.

India Markets Weekahead: Time to prune positions in an extended honeymoon

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The Nifty closed at a new closing high of 7,954 amid volatility in an eventful week that started with the Supreme Court ruling that the allocation of more than 200 coal blocks over the past two decades was illegal.

With nearly 3 trillion rupees at stake, this had a direct effect on the metals and power sector. It also affected banking, which has exposure to the two sectors.

India Markets Weekahead: ‎Tough for the Nifty to break out of its range

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The Nifty continued its upward trajectory to close at a two-week high of 7,792 in a holiday-truncated week. However, this optimism was not reflected in the broader market, especially the mid caps and small caps.

Among the sectors, public sector banks, realty, infrastructure and capital goods, which led the rally earlier, have underperformed in the last few weeks whereas defensives such as FMCG, pharma and IT stood out, an irony when markets are close to a record high.

How high will the Sensex go?

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A bronze bull sculpture is seen as an employee walks out of the Bombay Stock Exchange building in MumbaiSince April, the stock market has been in a frenzy after a long period of utter gloom. In quick succession, the Sensex jumped month after month to cross 26,000 on July 7. This was not mere euphoria created by the election of the Narendra Modi government, with a single-party majority in the Lok Sabha after a long time.

India Markets Weekahead: Tough for Nifty to climb above 7,800

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Indian markets were unaffected by the week’s international developments, with some help from encouraging domestic macro data and a pep talk by Finance Minister Arun Jaitley in post-budget discussions.

The Nifty recovered from the previous week’s losses, closing 2.67 percent up at 7664. Positive IIP data was followed by benign inflation at 5.43 percent, a four-month low. Monsoon rains, which had been playing truant, recovered substantially with the deficit shrinking to 15 percent below average last week and covering the entire country.

Budget strikes the right chord on reviving investment

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Finance Minister Arun Jaitley (C) poses as he leaves his office to present the federal budget for the 2014/15 fiscal year, in New Delhi July 10, 2014. REUTERS/StringerPatient, consistent baseline play rather than aggressive serve and volley — that about sums up the Narendra Modi-led government’s maiden budget.

Budget 2014/15 reveals priorities, sets the stage

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The new Narendra Modi government rides on a long wishlist of policies and reforms, with limited resources. Budget 2014/15, as expected, reveals the government’s priorities in the near and medium term.

Arun Jaitley poses as he leaves his office to present the union budget for the 2014/15 fiscal year in New DelhiThe inflation moderation imperative overshadows near-term headline growth desires, manifested in aggressive (albeit challenging) fiscal deficit targets. The projected fiscal deficit of 4.1 percent (3.6 percent of GDP in FY16) versus the 4.6 percent recorded in FY14, is in line with expectations. The reduction in the budget deficit is driven by hoped-for revenue growth rather than depressed spending growth.

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