The markets behaved on expected lines and after falling for the first three days rose on the last day of the week. Thursday was a holiday originally, but the same was changed to Friday and the rally thus happened on Thursday. The data was a mixed bag with both wholesale and consumer inflation rising. The rise in inflation puts paid to any thoughts that may have existed on easing of interest rates in the December meeting of RBI. Industrial production improved on the back of a steep jump in electricity generation. In any case this was the good news in the data packed week.
The rupee depreciated and the RBI Governor had to call a press conference and talk the rupee up. The rupee which during the week had fallen to Rs 63.90 recovered to close at Rs 63.11, a loss of 64 paisa or 1.02%. With this talking up the rupee Raghuram has demonstrated his ability for now that the street listens and believes in him. It has also exposed the weakness in the rupee at the same time.
After the incident where Anand Sharma criticised the report by Goldman Sachs on India and Narendra Modi, it is now the turn of international fund manager Jim Rogers. He has criticised all politicians and blamed them for the sorry state of affairs. He says that India has been badly managed for the last sixty years and one knows which party has been running the country. My question to Anand Sharma is that will entry of Jim Rogers to India be banned? Will his appearance on television channels be stopped or edited? How can one in the 21st century and the age of internet talk of controls on speech? Ridiculous and does not augur well for the country and the political party.
A number of borrower and some officials of NSEL have been arrested. The promoter and nominee directors of the FT group have resigned from the board of MCX where a case of “Fit and Proper” is currently underway. The whole episode of NSEL has become murky and the way it has been handled by the government agencies is indeed shabby and disgraceful. Whatever maybe the final outcome there are only two losers in this whole episode. The first is the country where commodities trading and investor confidence of the local investor and the international investor has been completely shattered and destroyed. The second is the domestic investor who now believes that caveat emptor “BUYER BEWARE” is the only thing that works in the country.There is no law and the regulators have simply brushed off their hands from this sordid and murky affair.
The markets will be driven by overseas new flow and FII inflows. We do not have much of domestic news this week. Markets are likely to open positive and the key would be to see whether the rally sustains and if yes for how long.