Money on the markets
A maturing market amid the mayhem
Finance Minister P. Chidambaram is not the only one walking alone.
Duvvuri Subbarao, the Reserve Bank of India (RBI) chief, also seems to be on a solitary, and one hopes, contemplative walk.
It’s not just the government putting pressure on the central bank to act and cut rates.
Minutes of a RBI advisory panel on monetary policy released on Wednesday showed Subbarao went against the advice of most external members, including economists and academics, in deciding to keep rates on hold at the Oct. 30 meeting.
The BSE Sensex closed 0.74 percent lower on Tuesday, tracking weak Asian markets and a downward bias of growth forecast by the RBI.
The latest inflation data for early March may please authorities ahead of national elections. Political leaders will trumpet the fact that the government’s efforts have yielded results and the demon of inflation has finally been tamed.
But the early March number throws up some serious concerns. It signifies that the Indian economy has entered a phase of deflation for a temporary period. Demand in the economy is extremely subdued and fresh efforts are needed to restore confidence.
The BSE Sensex closed 1.56 percent higher on Friday as investors saw an opportunity in the battered market that had plunged to its lowest in three years in the previous session.
The benchmark closed at 8352.82, supported by index heavyweights Reliance Industries (up 1.8percent), NTPC (up 2.2 percent) and Bharti Airtel (up 2.1 percent).
Years back, while on a trip to Jaipur, I had run into a rather energetic man who insisted on jumping the queue at the post office. When requests failed, I asked him why he was in a hurry.
“I have a savings account here,” he said proudly in Hindi, clutching a dog-eared booklet with currency notes tucked in. Ram Prasad, the 42-year-old cycle rickshaw driver had his way and left flashing his stained teeth.
The benchmark index seesawed all through the day and closed 20 points lower at 9015, pulled down by banks that slipped on concerns about their profit margins. The Sensex had dropped below the 9,000 mark in early trade.
Index heavyweight Reliance Industries gained 2.1 percent while Bharti Airtel was up 1.3 percent.
The BSE Sensex ended on a strong note on Monday, extending gains to more than 3 percent on hopes of fresh economic stimulus measures and another round of rate cuts by the Reserve Bank of India (RBI).
Gains were led by heavyweights like Reliance Industries, which was up 3.3 percent; ICICI Bank, which rose 5.1 percent, and State Bank of India which added 2.6 percent.
The benchmark index shrugged off lower-than-expected inflation figures and fell 1.21 percent on Thursday, as a slump in domestic demand and fresh concerns over the U.S. economy took a toll on investor sentiment.
The Sensex closed 110.97 points down at 9,090.88, snapping a two-day rise. Losses were led by Reliance Industries, which fell 1.6 percent to 1286.75, and HDFC which dropped 3.6 percent.