India Insight

Some investors in India look to the stars for stock advice

The 2008 financial crisis gutted Girish Kumar’s portfolio value by 90 percent. So much for technical and fundamental analysis. The 42-year-old textiles businessman from Jaipur turned to astrology, and now he says the stars guide him to a profit every month.

Kumar is part of a group of Indians who think that analysing the positions of the planets, stars and other celestial bodies can predict the direction of the stock market and suggest which companies and sectors deserve their money.

“There is something in this universe that makes it run. I believe in that,” said Kumar, who pays an astrologer 100,000 rupees a year, about $1,700, for stock market advice.

Though exact numbers are hard to come by, financial astrologers say that they have seen business increase by nearly a third every year since the 2008 financial crisis jolted Indian investors, many of whom are wary of investing in stocks, preferring instead tangible assets such as real estate and gold.

Despite rising disposable income and an emerging middle class, data shows that less than 5 percent Indian households’ savings are invested in stocks. In comparison, an estimated 20,000 tonnes of gold is lying idle with households, according to the World Gold Council.

from Pakistan: Now or Never?:

Despite rising India-Pakistan tensions, little planning for the next big crisis

In the very early days after the Sept 11 attacks on the United States, some in India, for the briefest of moments, believed Washington might be coming around to its point of view: that the problem and source of “cross-border terrorism” lay in Pakistan. Instead, an aggrieved India was forced to look on as Washington turned to its old ally Pakistan to help it fight the war in Afghanistan.

It was in that sour mood that New Delhi reacted with increasing anger to Pakistan’s support for Islamist militants targeting India in Kashmir and beyond. In October 2001, nearly 40 people were killed in a suicide attack on the legislative assembly of Jammu and Kashmir state in its summer capital Srinagar. When militants attacked the Indian parliament in Delhi on December 13, 2001 - an attack blamed on the Pakistan-based Jaish-e-Mohammed - India mobilised for war.  Soon close to a million men were deployed on either side of the border in a tense standoff that was not resolved until the following summer, and only then after intense U.S.-led international diplomacy.

To those of us who witnessed the build-up to the 2001-2002 standoff, the rising tensions between India and Pakistan - with both sides accusing the other of escalating fighting on the Line of Control dividing disputed Kashmir - bear a troublesome resemblance to that time. Then and now are bookended by the U.S. presence in Afghanistan which began in 2001 and is due to end in 2014.

Nagpal case highlights challenges for civil servants in India

(Any opinions expressed here are not of Thomson Reuters)

How does a civil servant survive India’s labyrinthine government bureaucracies? The question has come up again after the government of Uttar Pradesh suspended an employee and charged her with illegally allowing the demolition of a wall that was going to form part of a mosque.

The case of Durga Shakti Nagpal, 28, boils down to whether she was inciting religious disharmony through her order, or whether she was getting her comeuppance for trying to stop a sand mining racket in India’s most populous state. Her suspension also has highlighted the difficulties that bureaucrats face every day.

We asked current and former bureaucrats: how do young officers deal with hostile politicians and superiors? Does the IAS need changes to how it operates to make it easier for civil servants to do their jobs honestly? Should the judiciary control the IAS, not the legislature?

Markets this week: BHEL, Sun Pharma top Sensex losers

By Ankush Arora and Sankalp Phartiyal

It was a tough week for Indian shares with the benchmark indexes bearing the brunt as the rupee tumbled to a fresh all-time low of 61.80 versus the dollar on Tuesday. Fears of the U.S. Federal Reserve tapering its stimulus also weighed on street sentiment. The BSE Sensex and the Nifty ended down around 2 percent each during the week.

The day the rupee breached its latest record low, India appointed former IMF chief economist Raghuram Rajan as the next Reserve Bank of India (RBI) governor.

The central bank announced fresh steps after market hours on Thursday to curb volatility in the forex market. The rupee posted its best single-day gain in two weeks in anticipation of support measures by the RBI and the government.

Little public outrage as politicians unite against transparency

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

India’s political parties are united, for a change. It’s not over women’s safety or how many poor people the country has. They have closed ranks against moves to make parties accountable under the Right to Information (RTI) law.

The Cabinet has asked for changes in the RTI Act that, once approved by parliament, would exclude political parties from being covered by it. In other words, the Congress-led government wants to amend the very law that it once championed.

The government also opposes a recent ruling by India’s Supreme Court that bars jailed politicians from contesting elections and disqualifies them if convicted. A senior government minister told reporters on Aug. 1 that leaders of various political parties criticised the court ruling, which is seen as an affront to the supremacy of parliament.

India’s energy price reforms face hurdles

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

India has raised gas prices and also made it easier for power companies to pass on the rising costs of imported coal to customers – two policy steps aimed at boosting fuel supplies and helping to minimize the country’s chronic power shortages.

However, the reforms are unlikely to be a quick fix for India’s blackouts. It may take at least two years for the gas price rise to boost fuel supplies as investments in output and import facilities bear fruit, but even then the key to the plan may lie with distribution companies.

The state-owned distributors – known as discoms – will have to find money to buy the more expensive electricity from power stations. But passing on too much of the costs to consumers will be politically unpopular and the discoms may opt instead to simply halt supply.

The BJP and the Congress: a muddled economic ideology

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

As debates in India go, the one between Amartya Sen and Jagdish Bhagwati – two of India’s leading economists – has been fairly civil. Not the belligerent speeches or noisy protests that characterise public discourse in the country. Instead, this battle of ideas is taking place in the rarefied circle of the nation’s think tanks and financial pages, with economists, writers and policy makers weighing in. But the civility cannot mask the intensity on both sides; moving beyond economic data and models, the debate has become personal. At stake is a very powerful question – what is the best way to improve the lot of India’s citizens?

Conveniently, both sides have articulated their vision for the country in two recent books. The first by Sen and his long time collaborator, Jean Dreze, titled “An Uncertain Glory” questions why India continues to lag on all social indicators despite two decades of free-market reforms. Their data shows that the country’s growth has largely bypassed the poor and that the reforms have benefited a privileged minority. To correct this imbalance, Sen and Dreze make the case for greater public intervention in health and education.

On the other side of the economic spectrum is ”Why Growth Matters“ by Bhagwati and Arvind Panagariya, his colleague at Columbia University. Their book is a forceful defence of India’s growth story. Bhagwati and Panagariya assert that reducing the role of the government and allowing private enterprises to flourish is the only way to lift millions of Indians out of poverty. The state can fund welfare programs only if the economy is growing at a fair clip and public revenues are healthy. That such an idea is even up for debate is frustrating to them.

India’s Telangana fight explores new frontiers in political attack ads

(Note to readers: contains slightly graphic language and an aggressively provocative image.)

Dear American political consultants: you might think you know how to produce negative political attack ads, but you have much to learn. Caravan magazine’s senior editor Jonathan Shainin on Sunday shared on Twitter what he called “Unquestionably the greatest political poster of all time.” I admit that I have made no broad study, but this ad, coming from Hyderabad in Andhra Pradesh, seems to me to break some kind of sound barrier in the business. (Correction: I cannot confirm that this ad appeared in Hyderabad. A readers whose comment appears below tells  me that the ad appears in Tanuku in West Godavari District)

The Telugu-language ad features a local politician scolding Lok Sabha parliamentarian K Chandrasekhar Rao, a proponent of splitting Andhra Pradesh into two states. Reuters explains why creating a new state, Telangana, is controversial:

Deficit? What deficit? India makes a golden version of everything

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

Indians use gold for all sorts of things. As the world’s biggest gold consumer, its citizens use coins, bars and jewellery  as gifts, dowries and investments that are literally more solid than a share in a company. The ill effect that this has on India’s current account deficit has led the government to try to curb demand.  Here are a few examples of demand that nobody can seem to curb.

This week, gold importer RiddiSiddhi Bullion’s subsidiary Dia Jewels unveiled India’s first gold-plated motorbike. About 35 to 40 kilograms of silver went into making the miniature two-wheeler model, which is gold plated and studded with diamonds, and took six months to make, said Mukesh Kothari, director of Riddisiddhi Bullions.

“It was my dream project to make such a bike, which has never been made before in the Indian markets … Moreover it’s not for sale, so neither have we priced it nor have we marketed it,” Kothari said. The bike cost around $100,000.

Markets this week: Coal India, ITC top Sensex losers

The BSE Sensex lost 3 percent in the week ending Aug. 2, extending its losses from the previous week and marking its biggest weekly fall since mid-March.

Markets remained on the edge on uncertainty over how long the Reserve Bank of India (RBI) would continue measures to defend the rupee. The rupee fell 3.4 percent over the last five trading sessions and ended at a record closing low on Friday.

The central bank left the repo rate and cash reserve ratio unchanged at its policy review on July 30, but said it will roll back recent liquidity tightening measures when stability returns to the currency market.

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