Maid in India

Thought for the day

"Every man is guilty of all the good he did not do."

-          Voltaire (French, 1694-1778)

Word for the day

Flummox (v)

To bewilder; confound; confuse.

(Source: Dictionary.com)

Teaser for the day

Wonder why Salman Khan's sister's wedding is so much news!

Maid in India

For past couple of days many readers have been losing patience with me. They find me totally distracting. The common refrain is "why do you bother so much about decades. Tell us what the market will do between 9:15AM to 3:30PM today". They are not wrong. Neither am I. It's only matter of different approaches to achieve same goal.

Many live life as a series of discrete days. I see life as a continuous time series. I do not assign much importance to the discrete days, like last or first days of months, quarters, and years, in the infinitum of time. The random data points published on these days also do not bother me much. These data points, including daily prices, monthly sales and production numbers, quarterly profits, are relevant to me if they form a discreet pattern in a secular trend.

Now coming back to our discussion from yesterday, I believe that nurturing our youth well should be the top priority of the government. The incumbent government has in fact shown some promise by laying strong emphasis on skill development. But to me efforts so far look devoid of a conceptual framework. The objective appears to be limited to engaging youth in some sort of employment to keep them away from unlawful activities. This is not enough. In my view, youth should be educated and trained with the constitutionally mandated objectives of:

(a)   Equality - regional, social, gender and economic;

(b)   Dignity of life -self reliance and social status;

(c)   Scientific mindset and approach - global competitiveness;

only then the effort will make a socio-economic and perhaps political sense.

Opening thousands of engineering and management colleges without a conceptual framework has yielded nothing in past two decades. Thousands of qualified engineers/management graduates churned out every year end up doing petty jobs adding unacceptable level of cynicism to the economy.

A better alternative would be to open a micro institute in each village which trains its youth to work as domestic help - 6month course in basic language skills and etiquettes, nursing child and old, attending phones and cooking.

If every year 20 youth from each village could be employed as domestic help in cities earning Rs7000pm, they can easily remit Rs100,000pm (5000x20) back to their families. This works out to be Rs7200cr annually for 600000 villages. This money will create sustainable demand for quality school, good health center, paid electricity, financial services, housing, travel and other civic amenities.

At this point in time, nursing colleges will make much more sense than medical colleges. Providing drinking water to each household will bring more girls to schools than mid-day meal.

And let me tell you, not dowry or pride but incest is the primary cause of skewed sex-ratio and gender inequality in many states. Any youth policy that does not address this problem will remain as ineffective as the efforts made so far have been.

Broaden the horizon

Thought for the day

"Who serves his country well has no need of ancestors."

-          Voltaire (French, 1694-1778)

Word for the day

Star-crossed (adj)

Ill-fated; Thwarted or opposed by the stars;

(Source: Dictionary.com)

Teaser for the day

Should the government consider setting up a regulatory body for the Business of Religion?

Broaden the horizon

Continuing from yesterday...

Now, if demographic rebalancing is going to be a critical factor in the transition of emerging global economic and market to a new paradigm, and Indian youth has to play a critical role in this process, most profitable business and investment themes have to revolve around him.

I know this is cliché. But the unfortunate fact is that Indian growth in past two decade or so has miserably failed in creation of adequate productive jobs for the burgeoning workforce of the country.

I feel in spite of fully recognizing the potential of the youth and the problems faced by them, successive governments have mostly failed in implementing an integrated youth policy that would focus on harnessing this tremendous reservoir of energy.

India has so far issued three editions of national youth policy. The first edition was a brief 5 page vision paper which recognized the importance of youth but did not provide any conceptual framework for the growth and development of this one third segment of the population.

The second edition was issued in 2003 and contained a detailed framework for the implementation. It recognized that “the question of employment is, at present, of very serious concern for the Indian youth and that several social issues arise out of widespread unemployment and under-employment of the youth”. The policy emphasized that “critical issues in this area include a mis-match between skills-requirement and employment opportunities, low technology levels, low wages and low productivity, occupational shifts in employment, under-employment owing to seasonal factors, excess labor supply in relation to demand, migration of the labor force from the rural to urban areas and limited participation of women in the work force, especially in the organized sector”.

The policy was supposed to be implemented forthwith and reviewed after every five year. The change in government in 2004 however meant that it was hardly implemented.

The previous government had issued a draft policy in 2012 with the goal of “empowering the youth of the nation by bringing holistic development”. The objective, inter alia, included “Through a sustained program of education and training and appropriate support services, help young people become economically self-reliant and productive units of the country, either by taking up employment or by setting up their own business enterprises.” The policy has yet not been adopted. I hear that the incumbent government is working on a new draft that may be released in next 6 months.

My issue with the government approach is that it is too parochial. The government appears more concerned with keeping youth engaged so that they do not indulge in unlawful activities. I want youth to be considered most valuable and scarce natural resource, more precious than gold and diamond, and prospected and marketed accordingly....more on this tomorrow.

For the fear of Viking age - II

Thought for the day

"He was a great patriot, a humanitarian, a loyal friend; provided, of course, he really is dead."

-          Voltaire (French, 1694-1778)

Word for the day

Gravitas (n)

High seriousness (as in a person's bearing or in the treatment of a subject).

(Source: Dictionary.com)

Teaser for the day

Does MSY seriously believe that he can keep people in dark by not providing them free laptops?

For the fear of Viking age - II

Ever wondered why the leaders from most developed countries in Americas, Europe and Pacific rim are embracing PM Narendra Modi so tightly; especially in light of the fact that he was a persona non grata in many of these countries, including USA, just a year back!

Is it his oratory skills; his charming and warm persona; his popularity; command over a market of 1.25bn, or something else? I guess it is his receptiveness and responsiveness to the world leaders.

Even a casual study of Indian foreign relations in past few decades will highlight that the reception PM Narendra Modi is getting is not unprecedented. In past Indira Gandhi, Rajiv Gandhi, Atal Bihari Vaypayee and Manmohan Singh have all got such receptions. They were perhaps just not as responsive.

Indira Gandhi could not stay non-aligned in cold war; Rajiv Gandhi was too naive and got overwhelmed by poor economic conditions & internal politics; Atal Bihari Vajpayee exploded the Bomb and thus created an environment of mistrust with western powers; and Manmohan Singh was perhaps just too reluctant, reclusive and underwhelming.

Narendra Modi is experienced, free, confident, non-aligned and appears focused solely on economic agenda. The fact that Indian Diaspora in many developed countries has become increasingly prosperous and influential in their local context, also goes in favor of PM Modi. That is why he seems to be getting warm and positive vibes from many politicians.

But the moot point is why global leaders are looking keen to strengthen their relations with India, despite serious disappointment and setbacks in past few decades.

The transiting economic and market paradigms, I mentioned yesterday, perhaps would also provide answer to this inquisition.

In my view, demographics are playing a major role in the shift of the economic and market context this time. Most developed and even large developing countries are struggling with demographic imbalances presently. The problem is particularly severe in Europe and Japan.

In Europe on one hand population is aging fast and thus straining the fiscal and economic growth (pension, healthcare, lower income growth, low taxes and lower consumption); on the hand there is mounting concern over change in socio-religious structure of the population (see here).

In my view, it is not long when we will see radical and dramatic changes in immigration policies of many European and pacific rim countries, if not for anything else - for the fear of return of Viking age.

India, which has the largest pool of educated & skilled young English speaking people, is therefore naturally seen as the major partner in bringing the desired demographic changes....to continue

This set and game goes to US

Thought for the day

"Doubt is not a pleasant condition, but certainty is absurd."

-          Voltaire (French, 1694-1778)

Word for the day

Celerity (n)

Rapidity of motion or action; quickness; swiftness.

(Source: Dictionary.com)

Teaser for the day

Have we learned any lesson from KFA that could be applied to SpiceJet and Air India?

This set and game goes to US

Continuing from yesterday...

I am increasingly inclined to believe that perhaps the paradigm is shifting in global markets. I am certainly not suggesting "it is different this time". What I am saying is "it is the same as always".

The global market paradigms have shifted every few decades. The shifts have been caused by a variety of factors. Sometimes it has been led by shift in strategic and geo-political power (spread of European empires in 17th and 18th centuries and strength of US post second War). Sometimes technology innovation (industrial revolution in Europe and US, Japanese manufacturing renaissance post WWII and then internet revolution in US) caused the shift. Rise of oil economies post 1970's in middle east Asia and Chinese and Korean manufacturing revolutions have also caused material shift in global markets. Nature has also played vital role in causing tectonic shifts in global power equations and market balances. Decline of great Roman empire is case for study.

In most of these market transition phases, currencies have played a key role. Therefore it is pertinent to evaluate the current transition in global market paradigm from this angle also. And this is where I see a difference. In most earlier instances the emerging currency (including gold and silver in earlier instances) has changed its relative global value during the course of the shift. Sometimes strength in the currency or gold & silver stock played a critical role, as in case of British and Portuguese dominance in earlier centuries. In some cases weakness in currency supported the shift, as in case of the rise of Korean and Chinese manufacturers causing decline of Japanese dominance.

The present case appears no different. Japanese are trying to regain their lost market share in global manufactured goods market by depreciating their currency. Germans are struggling to retain their market share by forcing the Euro down. While US has almost won the war to retain the supremacy of dollar.

Considering that US fiscal deficit is shrinking fast, Current account is favorable and monetary stimulus has been withdrawn - the supply of USD to the global market is declining at a rapid pace. On the other hand, the demand for USD shall rise at even faster clip as Japanese, Chinese and European mints work overtime to print local currency.

This all will happen, when most emerging markets are saddled with huge dollar denominated debts; and commodity producers who sell in USD are facing serious erosion in demand.

I have written earlier (see here) also that Uncle Sam may have lost a few battles, but it is certainly on course to win the war. At this point in time no challenger is in sight.

However, we may see some resistance emerging in next decade. More on this tomorrow.

My five cents

Thought for the day

"Emancipation from the bondage of the soil is no freedom for the tree."

-          Rabindranath Tagore (Indian, 1861-1941)

Word for the day

Sinistral (adj)

Left handed: Of, pertaining to, or on the left side; left (opposed to dextral).

(Source: Dictionary.com)

Teaser for the day

I ask the PM and all his ministers in the cabinet - "Do they act without "Fear or Favor" and "Affection or Ill-Will", in accordance with the Oath of office and secrecy they take before assumption of office?

My five cents

Reportedly, the government has set the ball rolling for budget preparations little early this year.

From public utterances it appears that the Team Modi wants FY2016 union budget to be a stepping stone for delivering the election promise of good governance and faster & inclusive growth.

I believe, like all good citizens, it is my duty to contribute my five cents for this good cause.

Many of my suggestions may sound repetitive; which these are indeed. I strongly believe in the doctrine of "perseverance pays". Therefore, I am persisting with them. I would request my regular readers to bear with me for few days.

1    Introduce "reforms"

I believe that it is high time the government, businesses, investors and people start distinguishing between "administrative corrections", "systemic efficiencies" and "reforms". Reforms, in my view, involve fundamental change in the ways and means by which an objective is sought to be achieved.

2    Put more money in the hands of consumers

Given the current economic situation, the fastest way to return to potential growth is to motivate domestic consumption demand. Putting more money in the hands of consumers is therefore imperative. Employment, lower taxes, DBT, small ticket large scale schemes  - drinking water to all homes.

3    Focus on divestment against disinvestment

The government needs to accept that 62% or 52% government holding in public sector banks changes nothing on the ground. It just helps fiscal accounting or provides some more capital to be lost for the banks. The government needs to work on completely divesting most of its monopolies and businesses, including commercial banking, railways and civil aviation.

4    If you cannot beat them, join them

The government needs to evaluate whether it is feasible to stop people travelling to Las Vegas, Macau, Bangkok, and Phuket etc. or stop students going abroad to second rate universities even in countries like Russia, China, Australia etc. If it is found infeasible, why not allow a Vegas or Macau or Phuket or Harvard to be created on Indian shores?

5    Focus more on services than manufacturing

"Make in India" is a commendable thought. However, at this given point in time, a capital intensive and material resource intensive program such as this may not be commercially feasible to implement fast. On the other hand, focusing on services which are more labor intensive and require less capital and material resources may be more suited to Indian conditions.

I shall be elaborating on these thoughts in next few days. In the meantime readers are welcome to contribute their few cents.

Something is amiss

Thought for the day

"From the solemn gloom of the temple children run out to sit in the dust, God watches them play and forgets the priest."

-          Rabindranath Tagore (Indian, 1861-1941)

Word for the day

Kickshaw (n)

A tidbit or delicacy, especially one served as an appetizer or hors d'oeuvre.

(Source: Dictionary.com)

Teaser for the day

Just imagine Congress Party wins the Delhi assembly elections!

Many stalwarts, who have nothing to do, and cannot even enter Rajya Sabha, are in a tussle to become Chief Minister.

Poor Mr. Lovely who fought really hard to win the election is left alone to live another day.

Something is amiss

The results of recently concluded US congressional elections appear to have surprised many. The global media is witnessing intense discussion as to reasons and implications of the popular verdict that may see President Barack Obama reduced to a lame duck during rest of his tenure.

As the data would suggest US economy seems to be doing pretty well. Energy cost has fallen materially. Unemployment level has fallen to pre-crisis level. Fiscal condition has improved. Economic is back on its feet as stimulus stands withdrawn and growth is picking up. Foot soldiers are back from battlefields in Iraq and Afghanistan. Opponents like Russia, Libya, Cuba, Iran, Syria etc are weak in their knees.

Why the popular sentiment is so much against the President and his Democrat colleagues?

The answer perhaps lies in the Fed Chairman Janet Yellen's recent remarks about rising socio-economic inequalities in the US. “It is no secret that the past few decades of widening inequality can be summed up as significant income and wealth gains for those at the very top and stagnant living standards for the majority,” said Yellen during an Oct. 17 speech at the Federal Reserve Bank of Boston. “I think it is appropriate to ask whether this trend is compatible with values rooted in our nation’s history, among them the high value Americans have traditionally placed on equality of opportunity.”

This also has a lesson for the incumbent government in India. Any effort to achieve 8% growth would be meaningless if it is achieved without participation of the bottom 50% of the population. Focusing too much on the top 5% is perilous - both economically and politically. A deeper study of the 2004 loss of NDA-I and TDP, despite huge popularity of Atal Bihari Vajpayee and N. Chandrababu Naidu respectively, would provide useful clues.

Back home, the financial markets are suggesting a serious conundrum for the government and RBI.

RBI has conducted large reverse repo deals of Rs600bn and OMO selling of Rs100bn. Despite that benchmark 10yr yields have fallen below 8.2%. This large liquidity in the traditionally busy season when seen with the consistently weak PMI, IIP and services sector growth data is worrisome. The 2QFY15 corporate numbers are also suggesting lack of demand across sectors, regions and sections.

Under these circumstances lower inflation may not be a good sign, as it highlights the total lack of pricing power in the economy. In my view, it is too early to assume sustainability of low energy prices over a longer period. Hence, any hasty monetary policy decision based on lower inflation and lower energy prices may prove to be ineffective or even counterproductive.

Populism aside, given the material fall in most competing currencies and slowing demand in traditional export markets, there might be a need to maintain USD/INR at current or even slightly weaker levels to keep our exports competitive. Expected rise in flow post BoJ stimulus would not make things easier either.

9K on Nifty - I'll pass; you take it, if you must

Thought for the day

"Clouds come floating into my life, no longer to carry rain or usher storm, but to add color to my sunset sky."

-          Rabindranath Tagore (Indian, 1861-1941)

Word for the day

 Crapehanger(n)

A person who sees the gloomy side of things; pessimist.

(Source: Dictionary.com)

Teaser for the day

Most left leaning intellectuals were found searching for "substance" in PM's Man ki Baat.

Isn't it paradoxical?

Because the King talking to his subjects only about welfare schemes and money is very feudal and burgeon.

9K on Nifty - I'll pass; you take it, if you must

The global markets are once again on a high dose of steroid. As feared, Bank of Japan has undertaken yet another "whatever it takes" type of adventure. The immediate repercussions are (a) "risk on" trade gets more legs; (b) short sellers get squeezed out; (c) Yen weakens to coax main competitors Korea and China to follow the suit and make effort to weaken their currency triggering a currency war; (d) USD strengthens and therefore deflationary pressures on developed economies exacerbate and (e) ECB adds to the stimulus making US tapering look irrelevant in global liquidity context.

However, the midterm implications could be far worse than 2008-09 collapse.

Remember, this stimulus is not USD liquidity. This may conversely lead to massive USD demand at a time when US fiscal and current account deficits are shrinking and USD printing presses are taking some time off after working 24X7 for five years. This means USD may strengthened faster and in greater measures than anticipated earlier, making life painful for all emerging markets who are deeply indebted by dollar denominate debts.

Commodity world is staring at a deep abyss as the global consumption is showing no sign of turnaround. Chinese, South and East Asian, European, Indian, Latin American and even Middle East factories are running much below their rated capacities. This stimulus is not likely to change much on these grounds. On the other hand it may actually pressurize commodity producers to lower their local currency prices to match the gain in USD.

Watch for widespread losses and rising unemployment, stress and unrest in major producers like Australia, Canada, South Africa, Russia, Brazil, Chile etc.

A substantially cheaper Yen could also reignite geo-political rivalry between old foes Korea, China and Japan.

As per a Reuters report, the data this week data from both sides of the Atlantic will give clues in the coming week on just how bad the euro zone economy is and just how sustainable is its U.S. counterpart.

European Central Bank meets to decide on monetary policy and a new slate of economic forecasts and the United States will release its influential monthly jobs data.

A negative reading may precipitate ECB stimulus and softening of US rate hawks. The equity bulls will take full charge. The bond bears on the other hand will have to spend cold nights with their accountants to assess the massive losses inflicted upon them. In my view, their losses will be much more than what they might have earned in 2009-2011 by betting on European bonds.

And guess who will be having the last laugh? Of course it will be the mighty US Federal Reserve, who bought all the bonds that came its way in past 3years. It might very well end up making much more money than what people thought it would have sank in saving US financial markets.

Coming to business, I am not too excited about the market rally in past couple of weeks. I would stick to the plan, looking beyond 2015.

QE is dead, long live QE

Thought for the day

"The most common lie is that which one lies to himself; lying to others is relatively an exception."

-          Friedrich Nietzsche (German, 1844-1900)

Word for the day

Indignant (adj)

Feeling, characterized by, or expressing strong displeasure at something considered unjust, offensive, insulting, or base:

(Source: Dictionary.com)

Teaser for the day

Does our Constitution allows me the freedom to express my views on how women, children or men should dress, so long I am not imposing my views on anyone including my family?

QE is dead, long live QE

US Federal Reserve (The Fed) finally brought the curtains down on its two year old bond buying program, popularly known as "QE3", being the third round of quantitative easing post Lehman collapse in early winter of 2008. The gradual withdrawal ("taper") of the US$85bn a month buying program had started early this year.

The markets have appeared to taken the event rather with some relief. Remember, the talk of tapering and fear of potential consequences had caused substantial volatility in global markets last year.

I find it pertinent to reproduce the farewell note written by my favorite Bob McTeer for readers benefit. Trust me, few could have done this job better.

"I retired from the Fed on November 4, 2004, which will be 10 years ago in 6 days. At 8 AM tomorrow, I’m scheduled to give a speech on the economy after which I’ll have to give a defense of Quantitive Easing.

Texas audiences are polite, but they know deep in their bones that there is (was) something not quite right about QE. Their doubts have something to do with the impropriety of “printing money” even if doing so seems not to have turned out too badly. I’ve tried and tried to explain that there has been very little money printing during QE, and that is why the dire consequences of hyper-inflation, a collapse of the dollar, sky-high interest rates, and gold through the roof have not taken place. Unfortunately, it’s also the main reason that QE has not stimulated the economy any more than it has.

But nobody seems to believe me. They are deeply invested in the notion of money printing. They don’t want to hear that the Fed has been “printing” bank reserves and that banks have held onto large amount of those reserves as excess reserves without using them fully to fund new loans and investments and thus unleash the money multiplier. I realize I will never win the debate because everyone calls it an “experiment” and won’t let the jury come in until the experiment ends. As long as I’m leading on points, the experiment isn’t over.

Many critics still expect to be right about the dire consequences—just you wait. Well, I have some bad news for them. Growth in the M1 and M2 measures of the money supply has actually slowed over the past year; so, we aren’t on the verge of an inflationary blowout. QE is ending quietly.

Not that I’ve been a big fan of QE. I was when it started around November 2008. Chairman Bernanke’s improvisations saved our cookies back then. Sometime between then and now, the economy was probably strong enough to survive an earlier phase-out or taper, but every time one Q was about to end the economy swooned and we got another one. Following along one meeting to the next, I remained supportive, but, looking back on it, I find it hard to imagine that it lasted so long. Good riddance.

I do find it amusing that many of the early critics of QE are now faulting the ECB for not getting into the game earlier. I do dread the inanity of trying to guess in the next few FOMC meetings whether the phrase “considerable time” will survive and just how long is a considerable time anyway. Don’t forget that Chair Yellen following the previous FOMC meeting said that considerable time had nothing to do with time."

Conventional wisdom

Thought for the day

"We hear only those questions for which we are in a position to find answers."

-          Friedrich Nietzsche (German, 1844-1900)

Word for the day

incommunicado (adv or adj)

Without the means or right to communicate.

(Source: Dictionary.com)

Teaser for the day

The color of money is never black.

Money in fact has no color of its own.

It usually acquires the color of hand holding it.

Conventional wisdom

I have been insisting for past many months, rather annoyingly to some, that given the uncertainties that underscore the present global financial and macroeconomic conditions, it is critical to anticipate and understand the risks – evident, potential and unforeseen; and calibrate the investment strategy and portfolios accordingly, without losing the sight of the opportunity waiting on the horizon to be seized.

"Easier said than done" - yes it is.

Nonetheless I would like to offer some tips.

Be conventional

The current market rally started last summer with change in leadership at RBI. The event coincided with the government taking a series of measures to control the worsening balance of payment, inflation and fiscal balance conditions. Some measures were also taken to stabilize the rising stress in the financial system.

Most of these measures succeeded in achieving their immediate objectives. Consequently, global investors reposed faith in Indian markets. However, it took a change in government for the domestic investors to come back to the markets.

The market rally since last summer however has many peculiarities. For example, the rally was a very narrow one - confined largely to the stocks of companies with global linkages. Subsidiaries of global corporations, domestic companies with sizable global presence, and exporters were prime target of the buyers.

This group of stocks were given an unconventional and unsubstantiated nomenclature, viz., "quality". The traditional classifications like "growth", "values", "defensive", and "cyclical" etc. were ignored. The conventional criteria like valuations, growth outlook were also ignored in many cases.

The consequence, mostly inevitable, is a price bubble as per the conventional valuation norms, and a seriously crowded ownership.

A large part of my fear is emanating from this peculiar situation. Many of these stocks could correct or underperform in substantial measure (a) in case a global risk off is triggered due to any global  liquidity or solvency event or (b) a risk on is triggered in domestic market due to pick up in investment and consumption activities.

In my view, therefore, it is time to seriously consider and calibrate investment strategy to the conventional theories - valuation, growth and earnings momentum. I believe many outperformers of past 13months may fail the test and warrant an immediate exit.

It is pertinent to believe that the bull market in Indian equity market is yet to commence. What we have seen in past 13months is just influx of few dollars chasing yield arbitrage opportunities.

...to continue tomorrow

Investment strategy for Samvat 2071

Markets pregnant with hope

The Vikram Samvat 2071 begins on a positive note. The government appears in full control of the situation. Unlike past five years, no one is talking about paralysis, non-governance and corruption.

The macroeconomic indicators are stable and look poised to improve over next couple of years. Despite poor monsoon, the government has been able to reign food prices within controllable limits.

The measures taken by the incumbent government in past five months indicate clearly that a large part of the problem was perhaps administrative in nature. An assertive leadership with a decisive  mandate and progressive strategy ensures that administrative efficiencies are improved materially.

The government so far has taken a non-confrontationist approach to legislative hindrances. However, recent electoral victories should embolden it to pursue legislative agenda aggressively.

No normal delivery this time also

Some women have this tendency of difficult deliveries. They usually face problems like abnormal BP, Swelling on face and feet, elevated level of blood sugar, nausea, piles, etc. and a cesarean section is required for delivering the child. Whereas many others have a perfectly normal pregnancy period and a normal delivery.

My experience is that our Mother India falls in the first category.

The entire development and growth process in India is usually chaotic, unpredictable and painful. Save for some exceptional projects like Mars Mission, the final delivery is often delayed and does not conform to set quality standards.

I do not see any change in the general trend this time also. Nevertheless, I am confident that a normal healthy child will be delivered in time.

In the meantime, the external environment will cause volatility and mood swings. Investors should better factor in these more likely problems in their investment strategy. Energy price volatility may remain a serious concern.

Market outlook

Near Term (3 months)

I expect market to remain volatile in near term. Nifty may move in a large range of 7650-8250 for next three months.

At present ~8000 level the risk reward appear marginally adverse. However any correction below 7850 level could be used to take long trading positions.

I would strongly suggest avoiding any short positions in Indian market over next couple of years.

Short term (3-6 months)

I expect Nifty to remain volatile with a marginal positive bias over next six months period. Global events like European crisis and monetary stimulus would materially influence the day to day market movements.

Domestic events including budget for FY16 would prove to be positive for the market.

Save for a drastic global event like Lehman collapse (not improbable), Nifty should move closer to 8500 on upper side and should not fall below 7420 level.

Strong buying opportunities will emerge closer to 7700 Nifty level.

Mid-term (6-24 months)

I expect Nifty to make a strong positive move over next two year with upper bound at 10800. The risk reward at present from this perspective is positive.