Expert Zone

Straight from the Specialists

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

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(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.

India Markets Weekahead: ‎Ride the election rally but skim the profits

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(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.

India Markets Weekahead: Markets move into pre-election rally

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

A spectacular rally in the last few days has put the market in a pre-election mode, buoyant with hopes of a stable and reform-oriented government. Led by institutional buying and the resultant short squeeze, the markets rallied more than 3 percent in the last two trading sessions – closing the week at 6526, a record high for Nifty. The markets seemed to have moved into a new territory with metals, realty, banking, capital goods, infrastructure and energy sectors participating in the rally.

 Generally, the data points for a pre-election rally are the developments on political activities and opinion polls. The economic data takes a backseat in this “rally of hope” and markets take a keen interest in electoral analysis.

India Markets Weekahead: Time to size up portfolio

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

After a scare earlier in the week, the markets showed resilience at lower levels and bounced back, showing the confidence of participants. Though Nifty closed 26 points lower for the week at 6063, sentiment was much better than the previous week.

The year 2013 in perspective

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

The economy was already in distress before 2013, but with no significant action by the government and increased pressure from external sources resulted in more danger signals. It is now doubtful whether the economy will recover in the current fiscal.

The rot began in 2011. It took hardly two-and-a-half years to bring down the growth from 8.8 percent to 4.5 percent. The monsoon was good but badly distributed with the result that the summer crop did not show much improvement.  Industry is amidst stagnation with zero growth in April- October. The capital goods sector has been hit the hardest because investment declined, while the only silver lining was the improvement in external trade. Exports increased and imports declined which brought down the CAD to less than 2 percent of GDP.

India Markets Weekahead: Investors to remain bullish in election season

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

A surprise decision by the Reserve Bank of India (RBI) to keep the repo rate unchanged and a dovish statement from Ben Bernanke in his last news conference as U.S. Federal Reserve Chairman improved sentiment with the Nifty closing 106 points higher at 6,274.

Markets tottered for three days during the week amid fears the Nifty could break a crucial support zone between 6,120 and 6,140. Investors had discounted a 25 bps hike in monetary policy based on inflation numbers that were the highest in 14 months. RBI Governor Raghuram Rajan should be lauded for taking a practical stance as food inflation is expected to cool considerably in December due to improved supplies and the monsoon effect.

Indian hedge funds get knocked down but get up again

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

The fortunes of hedge funds focused on India continue to twist and turn, with many plots and subplots. After witnessing widespread losses and heavy redemptions in 2008, Indian hedge fund managers bounced back remarkably to post a 50 percent return in 2009. They continued their good form in 2010, delivering healthy gains of 12 percent during the year.

But in 2011, the managers witnessed losses amid declining markets and a depreciating rupee. At the end of that year, many managers expressed confidence in the underlying market for the following year and predicted gains for the rupee by mid-2012 — both these predictions came to pass. The Eurekahedge Indian Hedge Fund Index was up 13.13 percent in 2012, making it the strongest regional hedge fund mandate for the year. Some of the funds even witnessed asset inflows in 2012 and early 2013, a rarity for Indian hedge funds since the financial crisis.

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.

How the U.S. Fed’s tapering can affect Indian markets

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

It was never expected to be permanent. Quantitative Easing (QE), designed to pep up the U.S. economy after the financial crisis of 2008-09, has survived for five years. The United States is now on a rebound and unemployment is receding. That has tempted the U.S. Federal Reserve to reconsider tapering its economic stimulus.

This was first announced on May 17 and sent tremors through global markets. Asian markets were the most affected; India was worst-hit, having come to depend on FII investment. The knee-jerk reaction of FIIs was to reduce exposure to emerging market economies in the expectation that liquidity would dry up and interest rates would harden.

If change does come in 2014

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

The market is pregnant with expectations of a change after the general elections which must be held by next May. You would have to travel far and wide before you come across anyone in India’s financial market who is not hoping – even praying – for change.

The mood on the current policy direction is so gloomy that any alternative is looking like manna from heaven.

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