India Morning Report: For the times they are a changin’

Markets having been stabbed a good 2% down from 5850, are unable to maintain the range and reducing idv(volatility, vol) scores from 19 back to 14-15 or lower this time by giving in to lower levels even as the DMK situation holds center stage. In terms of body politic, Policy and Execution stability still holds the key and appearances can be deceptive esp with India caught on its earlier stance for the UNHRC resolution as Congress stoutly denies DMK allegations while the resolution may still avoid actionable penalties for Lanka in line with India’s admittedly ‘peacekeeping’ view.

That was the cause of the loss of confidence we frequently see in India’s foreign policy and marks a distinct lack of effectiveness in foreign policy even otherwise and this DMK action is a welcome intrusion on the serendipity. We frequently depoison our fangs and make our policy so rounded middle of the road that we have steadily lost our voice in the region and on international stage. Our corporate performance is a different matter altogether esp led by a robust financial services and banking sector which again takes centerstage as we await that required positive momentum over the next few months, the Economy having turned the corner.

We stay with our recommendations of this week earlier including the Banknifty, with further corrections in the same adding to the confidence interval on the way up.

Markets opened stable but that just means now they will be allowed to find the 5650 mark than immediately recover to the top of their range which would still be around 6000 and if longer term investing is earmarked funds should be spread over the period till early next Week than buying into a position at one go.

Rupee will also likely take the chance to weaken to almost 55 levels slowly. The situation of flux extends to global markets but there more important trend decisions could be due as markets except a almost perenniel non progressive trajectory for the European zone again for the rest of 2013 and FOMC decisions still have more than 30 hours to go. The UK budget could well be used to break the old confidence range for the sterling pound instead of recovering to 1.56 levels failure of which will trigger the expected Euro correction to 1.20 levels as GBP started strengthen ing against the EUR in the patently false move being repeated since 2008 but reaction to which this time will be guided by the Euro zone’s coming to terms with the diktats of austerity

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