Monsoon forecasts looking sadly forlorn, PMI barely noticed, Presidential elections due in 15 days and the rupee is already about to break 54 on the downside to even 53 levels if today’s trend spills over tomorro. The Nifty and the Sensex started the week at 5300 and hung on to it ( at 5288) for two days while the rupee slammed down hard after the change of guard the the PMO and landed from 57 to barely 54.4 today, the CDS also following it to 54.7 in NSE trading which has grown by leaps and bounds in the near USD contract
Right now the rupee is unlikely to give up its gains though the policy announcements gravy train is yet to begin it cannot really go much higher from here, or can it? The Sensex is also eagerly poised, making it interesting days ahead in the remainder of the week, the bulls looking for announcements like multi brand FDI, Infra project approvals and timelines, budgetary and extra budgetary grants ( states and cities are looking at empty coffers right now, DMIC and Bangalor Metro could stop without a cahs infusion and the Power companies have more annoucnements after the week began with easier terms for restructuring). June Auto sales were good for most and Tata motors kept most of the limelight having been the most beaten scrip in the last six – nine months
Yet all the scrips moving have attained close to their near term peaks even 52week highs in most cases and the macroeconomic fundamentals are mostly missing in full from Oil and Energy imports to growing exports, solving the revenue deficit and looking at ways to beat the fiscal without GAAR and divestments that have boomeranged on PSEs and private promoters.
Though none of the confidence is misplaced because the changes at the ministry and finding the right candidate for President are enough to do the trick, we do need follow up action for at elast some germaine topics before we can again enjoy the efficiency of the Indian model not to mention, cheaper fuel and imports after the rupee rose this week. In Rupee terms our exports were up 15% and 11% in the first two months of FY2013 and shrunk in Dollar terms after many categories were hotlisted. Agri exports could however end soona nd before that we have to get back something that actually delivers growth. Services , could keep India in the lead and make a recovery real for many nations aaround the globe, not just consumption / retail items but banking, travel and utilities. Infrastructure building can definitely pay quick dividends and even if only India’s consumer goods companies survive the times well enough to grow, India could be the success story everyone is talking about in a decade