DID THE POWER SHIFT DO THE TRICK ?
Sensex has rallied nearly 10% in last 1 month and picked up momentum in the last week on hopes that the wrong doings under Pranab Mukherjee would be undone by the seasoned economist in Manmohan Singh who currently heads the finance portfolio. Within days of taking over there is a sense of urgency in North block, whether its clarifying GAAR or deferrment of service tax on rail fares. It seems Manmohan Singh has finally been given the freedom the kind of which brought out the best in him during the 1991 crisis period. "The Finance Ministry under Prime Minister Manmohan Singh will very quickly resolve uncertainty among investors caused by anti-tax avoidance rules which were unveiled in the Budget", Planning Commission Deputy Chairman Montek Singh Ahluwalia said a few days later to a leading daily. In a sign of improved sentiment FIIs have pumped in close to `700 crore into cash segment just in the last 1 week, Nifty has rallied all the way to 5300 and Sensex is just a few hunderd points shy of 18000. Market strategists at leading research houses changing their outlook towards India as one of hope and optimism.
TURNING BULLISH ?
Jonathan F Garner , Morgan Stanley "India is trading well below long-run average valuations and close to trough valuations from the 2002 & 2008 perspective"
Adrian Mowat , JP Morgan "Turning positive on India on back of lower oil prices which in turn will help current account deficit"
Abhay Laijawala, Deutsche Bank "Tactical rally likely to continue in near term, pil off the boil make India look attractive valuations wise sharp deprecation in INR continue to be a tailwinds
REALITY BITES
Expectations and hopes can only take the markets to a limited extent but then sooner or later reality always steps in and we start to question the validity of any rally in the absence of any visible change in the fundamental picture. So before we pop up the bubbly and start celebrating lets take a moment to reflect on where we stand. Whether its rising twin deficts, dwindling industrial output and inflation there seems to be no light at the end of the tunnel.
KEY MACRO VARIABLE APRIL'2012
Industrial production 0.1%
Capital goods -16.3%
Auto sales 8.6%
Manufacturing PMI 54.9
WPI inflation 7.2%
Food inflation 10.5%
CPI inflation 10.2%
Trade Balance ($BN) -13.5
GDP STATS Q1-2012
Real GDP 5.3%
Industry 0.7%
Sensex has rallied nearly 10% in last 1 month and picked up momentum in the last week on hopes that the wrong doings under Pranab Mukherjee would be undone by the seasoned economist in Manmohan Singh who currently heads the finance portfolio. Within days of taking over there is a sense of urgency in North block, whether its clarifying GAAR or deferrment of service tax on rail fares. It seems Manmohan Singh has finally been given the freedom the kind of which brought out the best in him during the 1991 crisis period. "The Finance Ministry under Prime Minister Manmohan Singh will very quickly resolve uncertainty among investors caused by anti-tax avoidance rules which were unveiled in the Budget", Planning Commission Deputy Chairman Montek Singh Ahluwalia said a few days later to a leading daily. In a sign of improved sentiment FIIs have pumped in close to `700 crore into cash segment just in the last 1 week, Nifty has rallied all the way to 5300 and Sensex is just a few hunderd points shy of 18000. Market strategists at leading research houses changing their outlook towards India as one of hope and optimism.
TURNING BULLISH ?
Jonathan F Garner , Morgan Stanley "India is trading well below long-run average valuations and close to trough valuations from the 2002 & 2008 perspective"
Adrian Mowat , JP Morgan "Turning positive on India on back of lower oil prices which in turn will help current account deficit"
Abhay Laijawala, Deutsche Bank "Tactical rally likely to continue in near term, pil off the boil make India look attractive valuations wise sharp deprecation in INR continue to be a tailwinds
REALITY BITES
Expectations and hopes can only take the markets to a limited extent but then sooner or later reality always steps in and we start to question the validity of any rally in the absence of any visible change in the fundamental picture. So before we pop up the bubbly and start celebrating lets take a moment to reflect on where we stand. Whether its rising twin deficts, dwindling industrial output and inflation there seems to be no light at the end of the tunnel.
KEY MACRO VARIABLE APRIL'2012
Industrial production 0.1%
Capital goods -16.3%
Auto sales 8.6%
Manufacturing PMI 54.9
WPI inflation 7.2%
Food inflation 10.5%
CPI inflation 10.2%
Trade Balance ($BN) -13.5
GDP STATS Q1-2012
Real GDP 5.3%
Industry 0.7%
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