Straight from the Specialists
(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.
As such, Indian hedge fund managers started this year with their tails up, armed with strong returns and positive global investor sentiment. The managers witnessed healthy returns in January, helped by a rally in underlying equities as foreign investors poured more cash into Indian stocks. And just when you thought the sector was out of the woods, the positive run ended — most managers witnessed losses in February and March, finishing the first quarter in the red.
Investor reaction to the 2013-14 Budget was not very supportive, given that it did not include significant infrastructure development announcements. The second quarter was worse as the rupee declined, further adding to market losses suffered by managers. July and August witnessed a continuation of the negative streak, as the Reserve Bank of India’s (RBI) measures to support the rupee further hurt investor sentiment.
Banking is the backbone for growth in large economies such as India. Banks provide short-term finance to trade, industry and agriculture while also ensuring excess money is channelized into productive assets via deposits and financial intermediation.
Banks have to work under the stipulated policies of the central bank with respect to deposit mobilisation and lending for which they need to maintain minimum cash balances and government securities.
(Any opinions expressed here are those of the author, and not necessarily of Thomson Reuters)
Infosys stumped Indian markets again but for a change — positively. Recent management comments had built expectations of underperformance which led to cautious to negative views on the stock. Institutional investors were light on Infosys whereas the more adventurous speculators were short. And we were all caught on the wrong foot when the company declared a revenue growth as well as a net profit much better than consensus expectations.
A resolution for the U.S. “fiscal cliff” helped the markets cross the psychological Nifty benchmark of 6,000 to close the week up 1.82 percent at 6,016.
Though I expected a spirited rally, what we witnessed last week is a strong consolidation around 6,000 which could form a solid bottom for the next leg of the rally. This is also facilitating the entry of domestic retail investors which is visible in the mid-cap and small-cap volume and performance. The BSE small-cap index moved up 3.71 percent whereas the BSE mid-cap index gained 3.13 percent.
If calendar year 2012 was the year of scams in India which helped induce some much needed government reforms, the year 2013 is expected to be a year of hope and expectation for India and India Inc. There are expectations on better political governance, fall in inflation levels and hence interest rates, creation of an investment friendly business environment and lots more. It’s also the year with the last finance budget before the 2014 general elections.
(The views expressed in this column are the author’s own and do not represent those of Reuters)
Markets struggled to hold beyond Nifty levels of 5900 and closed the week 0.47 percent down, breaking a three-week streak of gains. Uncertainty over the banking regulations bill seems to have overshadowed better-than-expected wholesale price index-based inflation data in November. Industrial production soared by 8.2 percent, surprising analysts and sending signals that green shoots of economic recovery are visible.