Financial Daily from THE HINDU group of publications
Monday, Jan 30, 2006
Financial Daily from THE HINDU group of publications Monday, Jan 30, 2006 |
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Stock Markets Markets - Outlook Columns - A Ringside View Momentum vs political will Jayanta Mallick
IN the 250th birth anniversary year of Mozart, Indian stock market is going to listen to fusion music of money, orchestrated both by the occident and the orient. So think many global money-minded think tanks. Whether Indian capital market hogs the limelight for the international investors in the next few years or not, the infectious optimism has caught on. The big (and somewhat rosy) dream is like this. India would be the next big manufacturing hub of the world. The developed economies would try to leverage the growth potential of the country in a grand capital and technology alliance conceding a few geopolitical and economic grounds in the bargain. The corporate and rural India would coalesce to stage a new Asian drama. Rehearsing for a revolution: Stock markets never accept that bets essentially are on dreams; rather insist that they identify new stories with real possibilities. Is India herself convinced that it is actually on the threshold of a revolution? Corporate world appears to think so. But the rest is divided. What happens then? The rehearsal remains on show. For the stock market, however, it's a perpetual punt, either way. Last week was the punting on the continuity of the India show. Significant doses of front running by local players kept the indices, particularly the benchmarks, up. Domestic liquidity was able to lure substantial overseas money towards the end of the week too. The indices moved upwards holding a possibility of strong opening this week. Though there are gathering of clouds on the political firmament, ground realities are likely to dictate the sentiment. Iran act: Apparently positives are stacked against negatives. If the Manmohan Singh Government can pull off a balance in its stance over the Iran nuclear issue this week, then the market is likely to consider it as a highly favourable development for the sentiment. The market wants to be reassured that India's geopolitical and economic interests as also its efforts at ensuring energy security are not derailed. An appearance of a political consensus and a deft diplomatic handling of IAEA voting on Iran by India would also convince the overseas investors regarding soundness and consistency of the Government's policy. The overseas funds flow is likely to increase the trading turnover during the week. For a majority of FIIs, pre-Budget buying in India is yet to start. The recent entrants into the Indian market are also expected to step-up their investments in the coming weeks. Volatility is, however, likely to be part of the market mechanics this week also. The select mid-cap stocks, which are being warehoused by local operators, may continue to witness upward movement. Strong corporate developments and news flow are likely to attract retail investors towards mid- and small-cap stocks. Last note: Global crude oil prices would remain sensitive to the developments over the Iran's nuclear issue. Any complication may send the price-line upwards and, in turn, affect the stock markets world over.
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