Expert Zone

Straight from the Specialists

India Market Weekahead: Time to take profits but increase exposure on correction

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

The markets extended a winning streak and gained 3 pct during the week driven by strong inflows from foreign institutional investors, a decent set of quarterly numbers from key companies, positive news flows on the policy front and the RBI decision to cut cash reserve ratio (CRR) by 50 basis points.

The RBI surprised the street with the quantum of CRR cut and left its policy rates unchanged in line with expectations. The cut, the first since 2009, is expected to infuse 320 billion rupees into the system and ease the tight liquidity situation. On the policy rate front, we feel it is still premature to begin reducing rates as reduction will be determined by sustained signs of inflation moderation. Secondly, the RBI governor wouldn’t like to give a signal that he’s acting in a hurry and playing to the gallery. A repo rate cut in the March policy review seems unlikely and we expect the start of the rate cut cycle from the following policy review.

Interest rate sensitive sectors such as banking, auto, infrastructure and real estate have already rallied significantly and most of these stocks seem to be overbought considering a 25 pct – 30 pct rally in some of the large cap counters and some mid caps have returned more than 40 pct from December levels. Substantial gains from hereon seem unlikely and we may see a bout of profit-taking.

India Market Weekahead: RBI policy holds the key

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

Markets extended a rally for the third consecutive week led by strong FII inflows. FIIs have pumped in $1.2 billion so far this year as risk sentiment stabilised after several European debt auctions saw lower borrowing rates and overwhelming demand. Improvement in U.S. economic data, rupee appreciation and December quarter earnings exceeding lower expectations helped the market rally nearly 8 pct in three weeks.

Start topping up portfolio on correction

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

Indian equities have posted a good show so far this year with gains of around 5 pct. Receding euro zone debt worries and a stronger-than-expected growth in industrial production in November have strengthened investors’ sentiment. Food inflation continued to show a negative trend which also aided sentiment.

Volatile but undecided markets, awaiting cues

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

Trading for the New Year began on a positive note after the government’s decision to allow foreign nationals to invest directly in the country’s listed companies and after data showed a sharp improvement in manufacturing activity in December.

India Market Weekahead: Testing times but patience to be rewarded

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

Key indices witnessed a deep cut this week with the Nifty falling below the psychologically important support level of 4700 for the first time since November 2009. Experts have begun predicting a crash and rightly so, as all the levers of the economy have gone for a toss with pessimistic news flows. So the moot question is whether the market has discounted all the negatives? If yes, then why are Indian markets underperforming global counterparts week after week?

2012 – Boom or Doom?

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

What a year 2011 has been. Except certain commodities such as gold and oil, every other asset class has been hit. With Sensex down more than 20 pct YTD, 10 year g-sec yields up by almost 1 pct and rupee down by almost 14 pct against the dollar, it has been a poor year for investors. This was caused by a bout of strong global risk aversion led by the European sovereign debt crisis, high inflation in emerging markets and consequent monetary tightening, and lack of proper policy action in India. The only salvation came from commodities such as oil (up almost 26 pct in rupee terms) and gold (up almost 38 pct in rupee terms).

India Market Weekahead: Economic data to provide cues

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

After a sharp bounceback last week, Indian markets were not able to hold on to the gains and corrected by 3.7 pct during the week. The overall tone remained bearish on domestic concerns revolving around the government’s inability to push through key reforms and uncertainty over the Euro debt crisis and over the outcome of the European Union (EU) summit.

India Market Weekahead: EU summit, pace of local reforms to drive markets

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

After falling to a new two-year low the previous week, the markets reversed a downtrend and benchmark indices logged their best weekly gain since July 2009.

India Market Weekahead: Investor confidence, patience to be tested

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

The week that went by was quite a turbulent one which witnessed the Nifty plummet to a 2-year closing low on concerns of slowing growth, weak corporate earnings and a faltering rupee. Fears of a global economic slowdown continued to weigh on Indian stocks.

With increasing dollar demand in India as foreign investors withdrew from the country, the Indian rupee witnessed a sharp slide this week. At 52.76, the rupee plunged to record lows as fears of an unstable euro zone and a gloomy global economy persisted.

India Market Weekahead: Re-test of earlier lows expected

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

Initial optimism over the resignation of Italian Prime Minister Berlusconi faded quickly and there was further intensification of euro zone fear during the week. The Indian markets underperformed immensely vis-à-vis its global peers with a deep cut of 5 pct during the week. The sharp pangs of distressing high inflation, weaker rupee, disappointing corporate results and FII selling pushed the markets back to its earlier range of 4700 – 5200.

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