India Morning Report (July 03, 2012) : Markets willing to stay the course

As expected, the consolidation was bullish, hitting 5300 daily in the afternoon and today taking the opportunity in the strengthening rupee to break out ( vice versa) Markets continue to look optimistically at this turnaround as a material change in the economic and corporate fundamentals which is yet a long distance to go

That could very well mean that our eminent growth bias is restricted but yet available at 5% instead of 8% and some fiscal prudence and correction of energy policies would ensure we can continue the deficit financing mode as the path to the future given our complex dynamics between an empoered but bankrupt federal structure at the states and the constitutionally empowered center which vcontinues getting a fractional mandate. As usual., indians lean to be optimistic about the status quo once it is achieved and that stricture is responbsible for our long wait on the markets and the Economy in 2011 and 2012. Someone just needs to start investing again and as Asia and USA suggest it will be public spending that will take us out of this pit stop in the roller coaster ride. 

Europe has not done itself any good by cutting spending as even development spending is down by a couple of $20 B and that is what we have to avoid in the drive to fiscal prudence. 

The rupee will be back by next week, still trawling the near 56 levels which have receded quite fast since Wednesday last

 

 

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