NaMo's I'day speech : Its effect on the markets

[DSM]

TP,

Even if one plants tomato seed, it takes 2-3 months to bear fruit. And with Modi/BJP we expect him to deliver in this short period of time. I, for one was skeptical of Modi before election, due to his closeness to big businessmen. Last week, read that many of the same businessmen who supported and funded the BJP campaign are upset with him, because they cannot get an appointment with him. Now that he has become the PM, Modi is keeping them at an arms length.

One of Modi's recent speeches was about the fiefdom mentality in govt. departments. Power cliques are not so easy to dismantle and they impede change. But there are many structural changes that are happening which will bear fruit over a long term. It does not look like Modi wants to paint up the house full of cracks, so that things look attractive in the short term. He is taking a longer time view to fix things and do the job right.... (After all, the next elections are 5 years away ) But we have to allow Modi time to find his bearing and not expect him to take decisions hurriedly. Your two years allowance is good enough time to wait to see the change.

Comming to our markets, they driven by local and international factors. Consider these two as the wind and the current/tides. You need to have both are in your favour, and if in sync, market will move one way. Else, we can expect choppy action.

What you say about WPI, CPI does matter. But what impacts our markets more is the money flow of the FII's, which again is dependent on the international geo-political situation. Argentina this month got in a technical soverign default. (interesting story there - due to actions of one vulture fund) Then there is tension in the Baltics - between Russia on one side and Ukraine, Europe and US on the the other. A fight between big super-powers is not good for international trade or market sentiments. Further, there are many analyst who believe that even Chinese market is heading for a correction. Reason? overcapacity, large inventory holding and huge debt build up. Problems in Syria, Iraq are not making things better.

Now, S&P has had a long bullish run. But there is a good possibility of a breakdown now. It could be due to the international economic and political outlook, or the perceived threat of increase in interest rate hike by the Fed. If US Stocks will take a hit, Nifty can also test it many supports. Some big hedge funds have started accumulating bearish bets. George Soros for one is betting US$ 2 Billion on a market collapse. He has increased the size of his puts of SPDR S&P 500 ETF. His puts are up over 600% compared to the previous quarter. (His position on 30th Jun. Call options on 143,600 shares and put options on 7,802,400)

So overall, though optimistic about our markets in the medium to long term, we have to be cautious in the short term due to international market dynamics.

UPA rule being bad and continuing to worsen post-elections doesn't automatically mean that NDA rule is better. What riles me is the needless desire to appear optimistic and unthinking praise for everything that Modi/BJP does. This is very much akin to the recent Kejriwal euphoria.

Without a doubt, Modi is getting the benefit of the Kejriwal experiment and the public is willing to give him much more time than Kejriwal, who found the electorate sitting on his head right from the word go.

The share market traders may confuse the index movement to be a reflection of the economy. I would rather keep my expectations muted and be pleasantly surprised if and when the positive results show up; and not believe a word that the politicians utter, either way.


And keep an eye on the data - WPI down, CPI up; May CPI revised upwards; petrol cheaper twice in NDA-2; RBI transfers record surplus (52619 crores - 60% higher than the previous year) to the government; a lot of foundation laying ceremonies; layoffs by the corporates the world over; fickle geopolitical situation in Ukraine, Israel and now Pakistan; crude declining for 5th week.... etc.. etc.

 

[timepass]

FDI in railways, REITs : Why UBS sees Nifty at 8,000 by December end

Mumbai: Reiterating its bullishness on the domestic equities, Swiss brokerage UBS has said Nifty will scale the 8,000-mark by December even though market expectations from government remain "unrealistically" high.

"The market direction is likely to remain positive going forward. We believe investors will be willing to give a premium for growth potential, especially as cyclical economic recovery starts manifesting in data points...therefore we maintain our Nifty target for end-2014 at 8000," UBS analyst Gautam Chhaochharia said in a note.

Stating that the Modi government has already unveiled a lot of reform initiatives, the UBS note said, "Concerns about government inaction are misplaced which in fact is more a case of unrealistic expectations...and we are starting to see initial signs of scepticism from the market about the government's apparent "inaction" or lack of big bang reforms.

Stating that the Modi government has already taken many important steps in every major area, but they are ignored by the market, he said that expectations remain high and are arguably unrealistic as the government cannot address all problems at a go.

It listed ease of doing business, labour reforms, e-clearance of environmental and forest clearance, automatic production expansion licence to existing mines, widening of the scope of the Project Monitoring Group to include actual project implementation monitoring etc. as big steps.

UBS also listed the FDI in rail, insurance and defence as well introduction of real estate investment trusts (REITs) as big steps.

PTI

Well, as I said, tempered optimism, 2 years honeymoon etc..etc..

 

[jamit_05]

It is a dream run on the weekly chart. With Low in last August at 5100 and high this August at 7840, is over a 50% growth in Nifty in a years time. It does make sense to see some correction. How deep the correction will be depends on International currents, because within the Nation we are all set. We have a powerful mandate, a good leader and plenty resources to grow.

US GDP is improving this will make the FIIs readjust their investments and make some money move back over. Falling Crude prices is a strong indication that the tone world over is not of growth. Warring nations are not doing any good either. Israel-Gaza is an old conflict, so the outcome is fairly predictable. But Iraq, Ukraine, Russia issues could get unpleasant.