TWO CIRCUITS AND A SCAM

The Indian stock markets hit two circuits and were closed for the day. It was an unprecedented thing that happened.

A decisive win for the UPA has brought back the bulls in the market with a long list of wishes.

1. Easing of FDI norms for Insurance sector.
2. Reform in the banking sector (especially on the labour laws side)
3. Disinvestment from public sector undertakings to make up for the deficit brought about from last year's doles.
4. Dismantling of the Administered Pricing mechanism for petroleum products.
5. Easing of interest rates and making credit available to the industry.
6. Boosting exports by implementing a new export promotion policy.
7. Spending more money on health, infrastructure and education.
8. FDI in the aviation sector.

I HAVE ONLY ONE COMMENT TO MAKE FOR ALL THIS WISH LIST. THIS LIST WILL REMAIN A LIST AND YOU WILL PROBABLY BE ABLE TO SEE ONLY 40% OF THIS LIST COMING TRUE IN THE NEXT FIVE YEARS.

AS FAR AS THE MARKETS ARE CONCERNED THE REGULATORS ARE NOT IN SYNCH WITH THE MARKETS AND THEY NEED TO REFORM THE MARKET FIRST. A TRADING OF 300 ODD CRORES CAN STOP THE MARKETS FROM TRADING AND CAUSE A UPPER CIRCUIT. THIS IS THE BIGGEST SCAM OF ALL TIMES AND NEEDS TO BE PROBED.

Additional reading http://www.moneycontrol.com/india/news/market-outlook/nothing-to-be-proud-of-vk-sharma/398047/1

If the market can be easily manipulated with 300 crores then it is a very shallow market. We first need stock market reforms and we need a regulator not an opinion maker in the regulators seat.

All the best.

Foot in the mouth disease affects me

The UPA has won. It just needs either SP or BSP to lend a hand to the HAND. Dr. Singh will be KING again and keep the seat warm for the heir apparent. Now the question shifts to who will handle which portfolio? PC will have to reboot through the Rajya Sabha. Laluji has a strength of TWO so he has no hopes of making it to the cabinet.

What about the markets? Nifty will be on a new Government honeymoon from Monday and will surely scale up to 3950. It faces a technical resistance there (may be the market may not like the new cabinet or the new FM). If this resistance is breached then we can safely assume (FII Gods and world markets willing) to go up to 4250 in this pre-budget rally. By the way, we are in for a fresh budget from the new Government, the February charade was just a vote-on-account. A vote-on-account is just a permission from the outgoing parliament to splurge for three more months.

With fiscal deficit going out of the hands of the government and no new investment forthcoming the new government will have an up hill task of keeping the economy on the growth track. Our banks may not need a stress test but they sure will need some prodding and some loosening of norms for doing their regular job of credit disbursement. Of course they will have to be assured by the new government that the loans they give will not be waived off again and even if they are waived off, they will be compensated fast.

Now you will also see some more woe stories coming from foreign and not so foreign investors about the state of the economy not being conducive for fresh investment. Things like the limits on foreign investment in retail, insurance and MEDIA will be tossed around. These will be bandied around as reasons for the stock markets not performing well.

The MEDIA moguls need a pat on the back with loosening investment norms for all the PR that they have handled splendidly for the first family of India.

This will be the term when Dr. Singh will have to actually demonstrate that the nuke deal will actually fructify into a win-win formula for our country.

If you happen to read my earlier blogs you will notice a sea change in the style of writing. You will find this more blunt and more prophetic (to say the least). That is because, now that I have bungled once on the predictions of the elections results, I have developed a common disease prevalent in the political arena of our country "The Foot in the Mouth disease". Now it doesn't matter if my predictions are right or wrong I was wrong once anyway!

Waiting to Exhale

The Great Indian Election Drama of opposing postures is coming to an end tomorrow. All those who thought that the third front and the UPA are different will be in for a rude shock when they will muster all their might to come to power and bury their so called differences under the carpet of secularism.

If you notice the election campaign this year, there were four formations.

1. The United Progressive Alliance: which was not united at all and a splinter went up to forming a fourth front. The alliance was characteristic of unabashed sycophancy and unbridled faith in the first family of India. This alliance also made last ditch efforts to salvage its well wishers by using the CBI to give clean chit to all the well wishing offenders. You must notice one fact that majority of parties forming a part of this front have a common last name i.e. Congress and they root for a common last name too. i.e. Gandhi.

2. The National Democratic Alliance: which was non democratic to say the least. This alliance brought up non-issues when the real issues were not received well by the public. They understood late in the campaign that short and direct television campaigns without the "creative" was the order of the day. They have still not understood that they have to become an inclusive party and not an exclusive party to come to power. Here inclusive means more members and keeping the doors open for new members. Now that the contentions of Article 370, Ram Mandir and Uniform civil code have been kept in the deep freezer there is actually no ideological difference between the two national parties.

3. The Third Front: Means a bunch of regional satraps broken away from the congress of yore. these parties are really drifters with the only aim to get into power. They prefer to call themselves more secular than the Congress or the UPA and they also profess to speak for regional aspirations. Their slogan is to oppose congress in the states and truck with the congress in the centre.

4. Fourth Front: This is a group of parties broken away from all the three fronts with the USP of being away from the congress, the NDA and the Third Front. they would like to jump to the highest bidder post results.

I had not blogged for a long time because of the "Aachar Sanhita" which i had imposed on myself, so that my clouded political views should not add to the political confusion in the minds of the readers.

Now that the elections are over and the ban on exit polls has been removed, Amateurs like me can hazard a guess as to what will happen to the results. I am Hazarding this guess just for the heck of it and my guess is going to influence my strategies in the market.

Now for predictions: I think the house will be evenly divided between three fronts. if you combine the third and the fourth fronts. Left parties will gain enough seats so that they cannot be ignored in the formation of a government. I think all "secular" parties will come together to form the new government and probably this formation will also be given a new name as UPA will not be acceptable to come constituents (probably because of the word PROGRESSIVE in it!). This formation will lobby hard for the leadership of the government and a new face will emerge as the contender for the PM's post. It will be either Pranab Mukherjee or P Chidambaram. Congress would not give away the PM's post at all. If congress is forced to give away the PM's post then they will not participate in the government and will lend support from the outside only to pull the rug in the next Eighteen months. So, it is certain that it will be a congress led government without Dr. Singh as the PM and Left parties participating in the government.

Now for the markets. As I had written in my previous post the Nifty lingered around the 3600 mark until the election results and now it will take a decisive turn. If the Left parties form a part of the government then brace yourself for Nifty touching 1760 and if they do not participate in the government then it would be 4250 and beyond.

So all eyes on KARAT / BARDHAN/ YECHURY.