The Hindu Business Line : Signs of a bull and some clouds

Mack (an American expat working in India) and Bidyut (an economics professor) are going through research reports on markets when their friends Jogin (a student) and Divya (a journalist) join them.

Mack: Hey guys, Bidyut claims that the market is

showing a rally because of the elections. What do

you think? Will the Sensex drop after the elections?

Jogin: I don’t know about the elections, but I sure wish

some of our politicians drop dead. I mean, some of them

are old enough to, right?

Divya: I don’t know about that, but Bidyut’s views

are similar to those of several market analysts’.

Bidyut: Some of the reports I have seen recently have

been pessimistic about the market’s possible move.

Recently, Morgan Stanley advised investors to sell India

stocks and buy equities in South Africa.

Mack: These reports might not affect domestic

investments but foreign investors could take them

seriously.

Jogin: But there is no need to despair. Fidelity said

valuations of Indian equity are looking attractive when

compared with other emerging markets.

Divya: Moreover, several investors are saying that this

could be the start of a rally in Indian equities.

Jogin: I also read somewhere investor Rakesh

Jhunjhunwala advising investors to avoid markets

till the next government is formed.

Divya: All roads are pointing to the bull, eh?

Mack: Given the economic uncertainties and with the

elections, it would be better to wait and watch

before arriving at a decision.

Bidyut: I am not sure if all this optimism is because

analysts see a rally in the making or because they are

in a rush to be the first to predict a bull market.

Mack: Hey, but do not underestimate the power

of corporate results. Some heavyweights are set

to announce their quarterly results this week.

Reliance Industries, Reliance Petroleum and Reliance

Infrastructure can give a boost to the rally

even with a little bit of good news.

Divya: And results of HCL and TCS could clarify

the posture IT companies would have to take for a year.

Jogin: Also, some pharma majors are announcing

results. Remember that this has been one sector

that several analysts have called promising.

Bidyut: One sure impact would be the RBI’s meeting

on Tuesday. A rate cut announcement could help

the markets.

Jogin: But the important question here is for how long.

Mack: I hate to wreck the positive feeling that I kinda

started, but don’t forget that unemployment rates

are at uncomfortable levels in the US. We cannot

rule out the effect that would have on Indian markets.

Divya: Well, at least there is some good news

for farmers.

Jogin: How is that?

Divya: The Met office has said this year’s monsoon

would be near normal.

Mack: Meaning good farm output can be expected.

Bidyut: That would surely have an impact

on the market.

Jogin: So, after all, is it rain to the rescue?

Ram with inputs from Badri

Blog at http://MarketChat.blogspot.com