A “false dawn” is an atmospheric anomaly that would have you believe that the sun is about to rise a couple of hours before it is supposed to. Of course, it doesn’t. The phrase is often used as a metaphor for illusion— when you start to feel that a turnaround in fortunes is on the cards when it isn’t. Last fortnight, there was plenty to suggest on Dalal Street and at the Centre—and on Wall Street, too—that the bear hug on the stock markets is about to end, and the bulls could be ready to creep out of the shadows. For starters, the survival of the United Progressive Alliance (UPA) government— at the expense of the Left parties—triggered the hope that a burst of reforms would be squeezed in just before the next general elections.
Operationalising the India-US nuclear deal seems a reality, and the monsoons are showing signs of revival. That’s more than adequate reason for punters on the street to cheer, after months of being mauled by the bear.
The relief of falling crude prices was felt globally, and triggered a rally of sorts. Between 16th and 31st July, the Dow Jones in the US gained 139 points. The Indian markets outsmarted the Dow gaining 1,780 points in that period. After months of furious selling, foreign institutional investors (FIIs) finally turned net buyers—they bought shares worth $15.5 million in the July15-31 period as against sales of $6.62 billion in 2008. The billion dollar question: Is this rally for real, and is it here to stay, sweeping aside worries of still-rising inflation, high interest rates and, consequently lower economic growth?
That the government is in a mood to get on with things was evident last fortnight when it announced that private asset management companies—HSBC AMC, Reliance Capital AMC, and ICICI Prudential AMC, along with SBI AMC —would be allowed to manage employees’ pension funds. “This is the first sign of government going for reforms,” says Nikunj Doshi, Investment Manager with Envision Capital Advisors.
Running with the bulls
Hunting with the bears