Expert Zone

Straight from the Specialists

QE3 could boost Nifty to 5,550-5,600 in the short term

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

Indian markets have been buoyant since the European Central Bank’s decision on the unlimited sovereign bond buying program announced last week and the German Constitutional Court’s nod on Wednesday for the same.

The next trigger for the markets is the possible announcement of the third round of quantitative easing, or QE3, during the two-day U.S. Federal Open Market Committee (FOMC) meeting.

The moot question is whether Indian markets are having the BIRG (Basking in reflected glory) effect based on international cues. These global triggers act as steroids which can resurrect markets temporarily but sustaining them at higher levels would require domestic cues which have been missing for a long time.

Overseas cues to drive market but policy paralysis may cap gains

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(The views expressed in this column are his own and do not represent those of Reuters)

The European Central Bank (ECB) came to the rescue of world markets including India, which had a spirited rally on Friday to wipe out the losses of the past two weeks. The rally continued during the special session on Saturday to close the week at 5359, gaining about 1.9 pct. The week started on a positive note due to the recommendation on General Anti-Avoidance Rules (GAAR) dilution but failed to maintain momentum due to various disappointing data points as well as the political imbroglio.

GAAR-supported bounceback tough to sustain

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

A reversal after four weeks of gains saw the Nifty closing 2.38 pct lower at 5258. The mid-cap segment of the market caved in earlier with the large caps holding fort till Thursday. The Parliament logjam continued on the “Coalgate” issue and hopes of any worthwhile business being conducted in this monsoon session are dim. Given the political scenario, the war-rooms of political parties are getting into election mode, which could be earlier than 2014. This too will hardly raise hopes for Indian markets as the electorate seems too fractured to have a strong government which would have the ability to push through reforms, including non-populist ones.

Liquidity reigns supreme as market ignores data points

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The Nifty crossed 5350 levels last week after nearly three months with strong buying by FIIs, closing about two pct higher at 5320. Stronger than expected U.S. payroll data, positive cues from the  euro zone and comments from Finance Minister Palaniappan Chidambaram assuring to unveil a path of fiscal consolidation and undertake remedial measures to revive the domestic economy, boosted investor sentiment.

However, negative IIP data along with weak corporate results disappointed the markets in the latter half of the week, causing the indices to trim some of the earlier gains.

Overseas cues to drive the market but limited upside

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A positive week for the markets saw volatility in a narrow band with Nifty gaining about 115 points to close at 5216, a gain of about 2.25 pct. The midcaps and small caps outperformed the frontline stocks indicating retail interest.

FIIs continued with their buying spree lapping up about US$ 535 million worth of stocks. The new finance minister  Palaniappan Chidambaram was given a thumbs up but expectations of any radical move are low especially after the disappointment from Prime Minister Manmohan Singh in the last fortnight.

Hopes fade as investors await concrete action

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

It was an action-packed week for the markets but not for the reasons we had anticipated. Manmohan Singh’s government, which was expected to announce a string of policy action steps starting with a diesel price hike, failed to make any announcements which would have cheered markets.

Get set for an action-packed week

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

Markets continued to display weakness during the week except for a spirited, though limited, rally on July 18 after the UPA convinced belligerent ally Mamata Banerjee to fall in line for the presidential elections. The Nifty lost 0.4 pct to close the week at 5205 on political worries after the NCP, another government ally, expressed dissatisfaction with its functioning.

Markets await rollout of policy action

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

We saw some tiredness in the markets with subdued optimism as compared to the previous 4-5 weeks as the bouncebacks were not as sharp and strong. The Nifty tended to close at the lower end of the band at 5227, a fall of about 80 points. A major disappointment during the week was the below-expectation result from IT bellwether Infosys followed by a lower annual guidance.

India Market Weekahead – Time to book partial profits

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

A stupendous rally towards the end of June was followed by consolidation in the first week of July. Though the benchmark Nifty index ranged in a narrow band of 60 points between 5270 and 5330, the broader market especially the mid-caps were in focus with some of them returning more than 20 pct during the week. After a long time we saw domestic investors returning to the equity markets albeit with a lower risk appetite.

India Market Weekahead – PM’s call for “animal spirit” gets the bull raging

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

The last trading day of June brought back memories of a raging bull market with a single-day gain of over 2.5 pct while the month ended with a 6 pct gain. On taking over the finance portfolio, Manmohan Singh along with his ‘dream team’ seems determined to revive both domestic as well as institutional sentiment. It started off by mending announcements made by his predecessor, especially the general anti-avoidance rules (GAAR) which kept foreign investors away in the last few months.

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