Random thoughts on Gold

Thought for the day

"To listen is an effort, and just to hear is no merit. A duck hears also."

—Igor Stravinsky (Russian, 1882-1971)

Word for the day

Quaff (v)

To drink (a beverage) copiously and heartily, e.g., We spent the whole evening quaffing ale.

Malice towards none

Excess of everything is bad - even if it is Yoga!

First random thought this morning

Ever wondered what's the life expectancy rate in India!

The way people in their late forties and fifties are branded as kids and youth, it feels close to 120yrs!

But my insurance premium calculations are based on a life expectancy of around 70years.

What's amiss here? Is LIC cheating on me or the politicians & Bollywood fraternity?

Random thoughts on Gold

Not long back in the global history, aluminum was thought to be more precious than gold. Most powerful kings were served food in aluminum utensils while the lesser knights had to do with gold flatware. The sudden change in the value of aluminum took place when much cheaper means of refining the ore became available. Suddenly, it was disposable - as in aluminum foil or cola cans. In no time it transformed from most expensive thing in the world to garbage. Similarly, in African continent for long common salt remained a more prominent store of value and medium of exchange than gold.

I have always been crystal clear in my opinion that gold is not an investment product. But unarguably it has had its utility as the store of value for its limited supply and physical traits that make it indestructible.

In past five years, though, I have been expressing rather confusing views about the future of gold. On introspection, I discovered the following reasons for the incoherence in my views about gold.

First and foremost, I strongly believe that when economics fails in providing solution to the problem of livelihood and sustainability, philosophy provides the answer. It is a natural instinct of human being to look up to the skies for guidance when all our efforts fail. (Some even do so without making any effort at all!) Religion has therefore been an inextricable part of human life since beginning of the civilization and has grown with the growth and expansion of the global trade and commerce.

Most ancient cultures, China, Egypt, Mesopotamia, Indus Valley etc. have believed in continuation of life after death. Gold being an indestructible (and therefore sacred) object had always been an important part of their religion, culture, traditions and beliefs.

I therefore feel that a view on gold is not relevant without a view on the socio-religious trends.

In my view, the factors like popularity and spread of technology in common man's life; rising fascist and communist tendencies due to worsening socio-economic disparities; rise in electronic transactions (personal, social and commercial) thus lower risk (less travel, less physical transactions & deliveries); emergence of new articles of luxury to serve the vanity needs of the affluent; stronger and deeper social security programs; demise of monarchy; spread of spiritualism; dissipation of church & temples, etc., all indicates towards potential decline in traditional demand and pre-eminence of gold.

In the modern context, technologically challenging things, e.g., Bitcoins, have more potential to attract peoples' fancy as compared to gold, I feel.

The spread of radical Islamic forces is the only factor that somewhat weakens my conviction in decline of gold. But the way, the global war on radicals is progressing, I am sure that in next decade or so we shall see this concern easing materially and then gold may decline rather precipitously in value.....to continue tomorrow

Playing Ostrich

Thought for the day

"Harpists spend 90 percent of their lives tuning their harps and 10 percent playing out of tune."

—Igor Stravinsky (Russian, 1882-1971)

Word for the day

Embonpoint (n)

Excessive plumpness; stoutness.

Malice towards none

The politics over Yoga is unfortunate.

No surprises if it becomes a domain of foreigners, while our politicians bicker over it and Yog Gurus sell cosmetics.

First random thought this morning

I believed in the stories about how investment bankers manipulated markets, States, Central Bankers, Investors and politicians to rake in billions of dollars in trading gains during the global financial crisis 2008-09, but with a pinch of doubt.

I had been at a loss in understanding how come all these could be fooled so easily by a bunch of scrupulous bankers. This all sounded like commonplace stories of crooks looting jewellery from gullible women on the pretext doubling it.

But the clamoring of many "reputable" bankers and investment managers in the matter of Rexit and Brexit, which is clearly aimed at manipulating markets, makes things much more clear.

Playing Ostrich

"Ostrich" appears to be most popular global game at this point in time. Everyone appears to be closing their eyes or burying their heads in sand to obviate the need to address the real issues; some of which could be listed as follows:

·         Trillions of dollars of debt is yielding negative returns, thus jeopardizing decades of future growth and exacerbating socio-economic disparities.

·         Regional, economic, and social inequalities are rising at unsustainable pace -bringing back the specter of extreme nationalism (fascism) and communism, not seen since fall of the Berlin Wall.

·         Rising demographic imbalances are challenging the current global strategic equilibrium. The resistance to the process of repositioning of the strategic equilibrium is igniting conflicts that may have lasting impact on global economic sphere.

·         Ecological degradation is accelerating as many developing nations are beginning to industrialize at a meaningful rate.

·         Conventional and non-conventional monetary policy tools used by the large global central bankers are becoming increasingly redundant. Consequently, many leading currencies are presently valued far from their economic value - a state of affair that may not sustain for long.

Brexit in global context is a fistful of sand; Trump is another. The global financial and political communities are burying their head in them just to avoid the real problems facing the global economy.

Gold has traditionally been a large bowl of sand, often used by investors and traders to stick their neck in, during the period of crisis. The current situation is no different.

In USD terms, the prices of yellow metal is up over 21% YTD. The consensus suggests that a "leave" vote in tomorrows' referendum may send it much higher.

My readers are well aware that I have never considered gold as an investment worthy product. Still many of my readers have been asking about my views on the trajectory of Gold prices in future.

Well I can only reiterate my consistent position. Gold as a commodity has very limited application. At household level, It is owned mostly for the reason of vanity and religious sentiments. However, as a medium of storing and exchanging economic value, gold has been in currency since time immemorial. Before demise of Breton Wood in 1970s', on many occasions it has served as the reserve currency for global trade & commerce; and unlike other reserve currencies it has stood the test of time.

But as all good things have to end someday, the importance of gold will inevitably recede too. In my view the process had started with the end of Breton Wood and might get completed in next couple of decade.........to continue

Who is Rajan? What does he do?

Thought for the day

"My music is best understood by children and animals."

—Igor Stravinsky (Russian, 1882-1971)

Word for the day

Cater-Cousin (n)

An intimate friend.

Malice towards none

Mr. Market is perhaps the most cruel person around - He just destroyed the halo around Gov. Rajan within 20minutes of the opening trade on Monday(:-

First random thought this morning

Heard from an executive of European engineering company - (a) Investment in railways core infrastructure has not picked up despite lot of noise; (b) Smart city development is still on drawing boards, though the government officials are meeting the developers and solution providers. Hopefully execution will begin this Diwali; (c) The power equipment sector has material unutilized capacity and may not need capex in next couple of years.

Who is Rajan? What does he do?

In past 15years, my wife (a post graduate in Hindustani classical music and English literature) has been my barometer for judging the popular public opinion on any issue. I am usually able to assess the gap between "reality" and the "media presentation" of an issue by 7.30AM when she finishes reading newspaper with her morning cup of tea and throws a barrage of questions on me.

Yesterday morning was no exception. The first question she fired was sufficient to explain the frivolity of whole controversy over the Governor Rajan. "Who is this Rajan fellow dominating the headlines this morning (she does not watch news on TV)? Looks very handsome!", she enquired at 7AM, her tea still unfinished.

It took me precisely 30seconds to find answers for all the queries I had been struggling with since Saturday evening. I knew instantly that Rajan is a superstar of Mint Street, darling of the media and ping ball of politicians, having little connection with the common man.

The following five questions fired by my wife in quick succession, without waiting for my answer, destroyed the whole fracas build over his decision to not to seek a second term.

(a)   If Rajan successfully reigned inflation why tomatoes are selling at Rs60/kg and people are blaming Modi for this and not the governor?

(b)   Why my NRI brother still gets 9.5% interest on his fixed deposit with SBI, while my small deposit is getting renewed at 7%?

(c)    Accounting I do not understand. But tell me how much money banks have recovered from defaulters in past three years? My poor niece who works so hard for a bank, 13hrs a day and often on weekends also, did not get any bonus this year, because her bank passed some accounting entries!

(d)   If Rajan's departure will severely dent India's credibility in the international markets, what is the role of the government? Was RBI really not a respectable institution before Rajan?

(e)    Who is this El-Erian fellow? What business he has telling our sovereign government that failure to retain Rajan for another term will have serious consequences for India? Is he some terrorist or what?

I am actually thoroughly incompetent to answer these innocent questions. But after spending many hours in trying to answer the queries and worries of my readers since Saturday evening, I am sure that departure of Rajan may be a Good thing for Indian economy.

Insofar as the policies and programs are concerned, we have faced BoP crisis on many occasions in past. Every time we have modified our policies and introduced new schemes/programs to tide over the crisis. On all occasions we have been successful - 1991 being one case in point. S Venkitaraman, C. Rangarajan and then Bimal Jalan saw us through that crisis. Inflation and rates fell materially over that period. We sustained Asian crisis, global sanctions, and dotcom crash successfully and emerged stronger.

But none of these governors sought to undermine the stature of RBI as an premier and respectable institution. No one spoke out of turn. No one sought a super star status for himself.

Apparently both C. Rangarajan and Bimal Jalan harbored political ambitions, but not at the expense of the institution. They did not charm the media personnel or global investors to canvass support for them.

Insofar as the commentary of opposition leaders, Bollywood sundries, et. al. is concerned. I truly find it frustrating.

P. Chidambaram and Rahul Gandhi clamoring for Rajan is the most ridiculous sight I have seen in years. These are the people who denied second term to APJ Abdul Kalam and preferred a totally uninspiring Ms. Pratibha Patil over him. He was one man who was unarguably admired by 125cr Indians (except perhaps the Gandhi family) and all world leaders. If that was not wrong how this is wrong?

Please note that I have nothing against Dr. Rajan. I totally disagree with Mr. Swamy in casting doubts over his competence, integrity and patriotism.

But I feel, the way he has conducted himself in undermining the superiority of the RBI as an institution leaves much to desire. If PM and FM were wrong in not supporting him openly when Dr. Swamy attacked him, he is also wrong in not telling El-Erians of the world that RBI is a strong autonomous institution with a robust policy framework, and one person matters nothing to this. (Though he said something to this effect on Sunday, it was too feeble and insufficient, in my view.)

People who doubt RBI autonomy may explore the archives and read what the analysts said after each policy statement of Y. V. Reddy and D. Subbarao. These two governors were reportedly consistently at war with the respective finance ministers on rates, but did never succumb.

Last but not the least, if the monetary efforts of the RBI under governor Rajan were not duly complemented by the fiscal efforts of the government (risking its political career and perhaps some elections) the results might not have been as good as they look today.

Restrictions on gold imports and gold monetization scheme (annoying their core constituency of traders), not passing over the full advantage of the fall in crude oil prices to consumers by hiking duties (bearing the wrath of opposition in and outside the parliament), saving subsidies on LPG etc., attacking wholeheartedly on generation and deployment of black money through administrative and legislative measures etc. (annoying businesses and traders and even compromising on growth), taking government patronage off the willful defaulters, liberalizing FDI rules (to the annoyance of RSS and other affiliates) etc. are just some of the efforts that have strengthened the Indian macro position.

Gold is not the endgame

Thought for the day

"If we were to wipe out insects alone on this planet, the rest of life and humanity with it would mostly disappear from the land. Within a few months."

—E. O. Wilson (American, 1929)

Word for the day

Villatic (adj)

Of or relating to the country or to a farm; rural.

Malice towards none

Is CBFC social police or a constitutional institution?

If it is constitutional - why it does not appear to respect the "Right of Equality" by treating male nudity differently from female nudity?

If it is social police - do we really need it?

First random thought this morning

The media circles are abuzz with the juicy rumors of 2017 presidential elections. With BJP in poll position, normally it should be a "No contest". However, there could be an intense battle within BJP over choice of an "appropriate" candidate for the top post.

As per media reports, BJP is considering some RSS ideologue for the post. If this happens, it will might be another reason to consolidate the opposition and add more decibel to the "BJP vs. Rest" pitch.

Gold is not the endgame

The socio-economic disparities are rising in the developed world at a pace unprecedented in the economic history. The situation in my view is likely to materially worsen in coming years.

Inarguably, the so-called unconventional monetary policies followed by the central bankers own the primary responsibility for this phenomenon.

With an overwhelming US$15-17trillion worth of bonds, many of which are 10-30year maturity, are yielding negative return at this point in time. Many more promise to return no income to the holders.

Poor savers and pensioners who mainly rely on their savings for their livelihood are stressed like never before.

Large economies like Japan and EU have mostly failed in their vigorous efforts raising inflationary expectations in their respective economies. There is therefore little incentive to invest in these economies. The employment opportunities are therefore not likely to rise in any sustainable manner.

I sincerely believe that at this juncture no one appears to have any clue how to get out of this vicious cycle. So, we are likely to see many trial and errors, including from US Federal Reserve. The traders in financial markets therefore need not unduly worry about any move (e.g., a Fed hike in July) or absence of a move (e.g., BoJ staying put yesterday). Any adverse movement in the asset prices due to such trial and error would restored shortly through a prompt reversal or neutralizing effort.

The investors may however need to plan their strategy carefully. Though the endgame need not be built in the strategy for next 3-5years; a longer term strategy would require the end game to be factored.

There is no dearth of experts who have written about the endgame of the current monetary policy practices. Most of them suffer from historical hindsight and extrapolation of current trends.

Being no expert of global economics and monetary system, I can afford to conveniently break from the empirical experience and think freely. I believe the endgame will be mark a watershed in global economic history - among other things, many systems will become redundant; many currencies will cease to exist; and monstrous debts will be written off the books.

It is difficult to fathom that this task can be achieved under the current democratic system. Communism will therefore make a grand entry sometime in next two decades, in my view.

A large number of analysts have forecasted that gold will be a preferred currency of the world amidst all this chaos. I beg to disagree.

In my view, the factors (scarcity, indestructibility, religious sanctity, universal acceptability, and feudal ownership etc.) that made gold a preferred currency during many crises in the global history would have become redundant in two decades. It will therefore be something new and contemporary that will become global reserve currency....to continue on Tuesday.

Nifty: Some jitters ahead of keenly watched events

Thought for the day

"When you have seen one ant, one bird, one tree, you have not seen them all."

E. O. Wilson (American, 1929)

Word for the day

Slyboots (n)

An engagingly sly or mischievous person.

Malice towards none

After an intensive research of two years, I could find one good thing about Arvind Kejriwal - While all other parties use proxies for making nonsense, defamatory, unpleasant, and controversial statements, AK does it all himself.

First random thought this morning

I find controversy over the movie Udta Punjab, totally avoidable.

To the CBFC - expletives are inextricable part of the common conversation in Punjab; drugs are as common as Lassi; even Amir Khan did pee on the wall of historic Red Fort in PK.

To the film maker - the film serves no interest (artistic or public), as it shows a problem everyone concerned is fully aware of, and offers no worthy solution.

Nifty: Some jitters ahead of keenly watched events

This week, FOMC meet, and consequent movement in global currencies, commodities and equities might influence the trading pattern in Indian equities also. Besides, the Brexit poll scheduled for next shall also impact the sentiments.

Last week, Nifty failed at its strong immediate resistance level of 8330 and corrected a bit. The fall in Nifty however lacked any conviction and was driven more by caution.

With this correction though the short term indicators have turned little bearish, suggesting that the correction may extend little further, there is no reflection of any weakness on the medium and long term charts. To the contrary, this correction is taking some froth out leading to strengthening of medium term outlook.

My trading strategy under the circumstances would be as follows:

(a)   Any fall (sharp or shallow) in the market is a buying opportunity from medium term perspective.

(b)   Nifty continues to face resistance at 8330 level and has a strong near term support in 7860-7930 range. Any fall below 7750 level will be an opportunity to create aggressive leveraged long positions.

(c)    On Bank Nifty 18000 is a strong near term resistance. The near term support exists in 17150-17300 range but meaningful support is only around 16800 level. This suggests that the correction will essentially be led by banking stocks. I will consider aggressive leveraged long position in banking stocks around 16300 level.

(d) I continue to maintain August 2019 Nifty target of 13900 and view on cyclical Nifty bottom at 7490 level. Any fall below this is exceptional buying opportunity.

 

 

Shimla: An epitome of unsustainability

Thought for the day

"From such crooked wood as that which man is made of, nothing straight can be fashioned."

—Immanuel Kant (German, 1724-1804)

Word for the day

Gormless (adj)

Lacking in vitality or intelligence; stupid, dull, or clumsy.

Malice towards none

The socio-economic disparities, racism, sectoral hatred and corruption has been rising in India ever since independence.

Emotions and prejudice apart, we can at least have a national panel to assess whether there is a need to set up a assembly for reviewing the Constitution!

First random thought this morning

The precipitous decline of the Congress party started with poor performance in 2012 UP assembly elections. Since then the party has seen material erosion in its strength and status. It has consistently fared poorly in various elections held in past four years. Many strong regional leaders have deserted the party. 2017 UP elections are critical for the party.

A good performance in UP-2017 may reverse the trend, whereas a poor performance there might lead to accelerated desertions and intense internecine infighting. This time, PK has a do or die battle at hand!

Shimla: An epitome of unsustainability

I decided to extend my Punjab trip and travelled through Solan and Shimla districts of the adjoining Himachal Pradesh - a decision I seriously regretted just half an hour into the State.

This is supposedly peak tourist season for the State. A large number of vehicles enter the State from Chandigarh via NH-22; the highway that is being widened. The people at the job were poorly trained and had little regard for safety of the travelers using the road. There was no planning and huge traffic jams were caused. A 45km distance from Parwanoo to Solan took nearly three hours, and the drive was bumpy, dusty and risky. At least on three occasions monstrous construction machines threatened to overrun my tiny vehicle.

The ordeal did not stop there. entering Shimla city was a nightmare. It took over an hour to cover the last mile. It was shocking to see that there are traffic signals on the steep inclining streets of Shimla city, where the wait period sometime extends to 10-12minutes. A large part of the city resembles an urban slum.

After a struggle of almost two hours, I could manage to get out of Shimla city on the way to Naldhera, a popular golf resort, 15miles north of Shimla. I stopped at Mashobra for a cup of tea, where I met this Couple from Chennai. They were coming from the popular tourist point of Fagu in Kufri. and were in a state of deep shock. The lady was categorical in her laments - "If there is Hell anywhere, it is here". Their experience prompted me to drop my plan to visit Naldhera and take a left turn for the famous Fagu tourist point, just a few miles from the summer resort of the President of India.

Let me assure you, Hell is a gross understatement for this place. 1500 mules, their attendants and tourist riders jostle with each other perilously on a dusty, narrow, badly stinking and extremely dangerous path to travel 1.5km to reach the tourist point. It is almost impossible to walk on this path. There are no disaster management arrangement there. Just four indifferent policemen are posted to manage an average 5000/day tourist flow during season. The in-charge district commissioner sits in Shimla and occasionally visits the place. The worse part you are required to pay Rs500/person for this ride to the Hell.

I feel compelled to write this bitter experience since I found Shimla an epitome of unsustainable economic development. The city in my view is a harbinger of the disaster in the making. While media, ecology activists, judiciary and experts are diligently focused on the pollution levels in Delhi, the real time bomb is ticking elsewhere.

I suggest NGT and/or the Supreme Court take suo moto cognizance of the situation and order (a) immediate shifting of the capital of the State out of Shimla to some non-tourist place in plains like Hamirpur; (b) immediately ban the construction of any new concrete structure in the city; (c) limit the number of vehicles and tourists that can enter the city at any given point in time.

Land of five rivers, drying up

Thought for the day

"Always recognize that human individuals are ends, and do not use them as means to your end."

—Immanuel Kant (German, 1724-1804)

Word for the day

Complaisant (adj)

Inclined or disposed to please; obliging; agreeable or gracious;

Malice towards none

Whatever good has happened in the country in past 2years seems to have been done by the government, including a Kashmiri youth passing IAS exam and girls topping various exams!!!

Did poor citizens also contribute something or its all superman Modi's magic?

First random thought this morning

A large number of foreign investors have issued veiled threats of market destabilization if Gov. Rajan is not given a second term. Many local business and financial luminaries have also echoed their sentiments.

This is unprecedented and unacceptable.

This presumes that (a) Rajan is inarguably the best and the government cannot find a better substitute; (b) what Rajan did was the best one could have done under the circumstances; and (c) Rajan would want to continue to be at the helm of RBI till eternity!

Land of five rivers, drying up

Last week I travelled through the states of Punjab and Himachal Pradesh. The objective was to assess the political and economic situation in these states, especially in view of the Punjab assembly elections due early next year.

Though Punjab elections are not as critical as Uttar Pradesh election (which will be held simultaneously with Punjab & Uttrakhand), they are evoking keen interest amongst observers.

The observers shall be looking for three key points in these elections, viz., (a) whether BJP-SAD alliance in the State stays or it ends like the BJP-SS alliance did in Maharashtra; (b) whether Congress party could resurrect itself in the State overcoming the bitter infighting; and (c) whether AAP could sustain or improve upon the gains made in the last Lok Sabha elections.

The primary election issues this time seems to be (i) alleged blatant corruption in the Badal government; and (ii) rising cases of drug abuse.

My key observations during four days of travelling through Punjab and talking to many people from across socio-economic spectrum of the State, are as follows:

Economic conditions

(a)   Both the farming and MSME industrial segments of the State are deeply stressed. The industrial space in the state is dominated by MSME units in textile, industrial components, and agro processing sectors. Construction sector has been one of the key growth & employment driver in past one decade.

       Falling exports, labor shortages, water shortages, poor capex cycle, poor liquidity, drying credit lines, slowdown in construction sector and alleged pervasive corruption in the government have added to the stress in farm sector. Labor shortages are driving huge investment in farm automation.

(b)   There is a perceptible move towards cash crops from the traditional cereals. The trade in agri produce is modernizing at satisfactory pace.

(c)    There is perceptible slowdown in repatriation of money from foreign shores, that has been a primary source of investment in the State. The number of cases of reverse partition (local family members sending money abroad to support the expatriate members; and investment in business ventures abroad) are rising at a rather faster pace. Though there is no impact on the enthusiasm of youth who want to immigrate.

(d)   The ITeS sector is growing fast and witnessing good investment. The current generation of youth is now willing to join service. Traditionally Punjabi youth has always preferred self employment or business as compared to working for someone else.

(e)    The income inequalities and concentration of wealth are perhaps rising much faster than the national average.

(f)    The Punjab villages are perhaps most urbanized in the country. The scope for more investment in this space is therefore limited.

(g)    The demand for services like health care & education is rising fast. Both sectors have seen significant investment. But education is a major area of concern. Like all other places, the difference between the public and private school education standards is huge. This is having perpetuating effect on the socio-economic disparities. Surprisingly, not many poor people were complaining about this.

(h)   Sex-ratio is still very poor, and all malaise attendant with this problem are present in full measure.

(i)    Drug abuse has become a worse menace than the terrorism in 1980s.

(j)    The western fast food like Pizza and Burgers have been fully localized to suit the local taste, whereas the traditional food is diminishing just like the skills in local arts & crafts.

Political situation

(i)    The people are certainly unhappy with the incumbent government. The government is popularly believed to have fared poorly on socio-economic front. The allegation of blatant corruption are part of the folklore.

(ii)   Unfortunately, Congress does not appear to be in a position to fully exploit the dissatisfaction of the people with the incumbent government. There is bitter infighting within the party. Though the Capt. is trying hard to strengthen his position, he may not reach to the winning position in six months.

(iii)  The vote bank of BJP - RSS, Arya Samaji, Army background people, relatives of NRIs etc. is intact. Whereas the communal Sikh vote bank of SAD appears divided. AAP has gained some ground amongst traditional vote bank of communist party in the State - mostly Dalit Sikhs and marginal farmers.

(iv)   BJP will have upper hand if it breaks its pre-poll alliance with SAD, like the way they did in Maharashtra, and makes this contest Modi vs. Capt. AAP will certainly help BJP in a four cornered contest, as it would eat into both Congress and communal Sikh votes.

Though these are early days, I would still hazard a guess on the likely outcome of the polls.

(a)   If it's a four cornered contest (BJP, SAD, Congress and AAP) - BJP may reach close to the majority mark on its own.

(b)   If it's a three cornered contest (BJP-SAD, Congress and AAP) - BJP-SAD may still be the largest combine, but short of the majority mark. Congress might succeed in forming the government with the support of few AAP legislators.

(c)    AAP as a party is not strong in the State, but it has some good people on its side. 10-15 seats for the Party are possible but not certain.

(d)   Even if BJP breaks the State level alliance with SAD, there may be no change in the central government and SAD may continue to be its part.

Nifty: Bull market confirmed, many questions unanswered

Thought for the day

"I had therefore to remove knowledge, in order to make room for belief."

—Immanuel Kant (German, 1724-1804)

Word for the day

Jimjams (n)

Extreme nervousness; jitters

Malice towards none

100miles from Delhi a real seditionist encroaches 280acres of Indian territory and uses it to launch a battle against the State.

Someone did it in 1984 also. Haven't we learned any lesson from the killings of thousands of innocent lives then?

Could central government be absolved on the plea that it's a State subject?

First random thought this morning

A street dog warned me yesterday evening that FOMC meeting next week and UK vote on EU membership the following week, pose significant risk to the global equity markets. The trading data suggests that very few have sold so far. Most traders are perhaps waiting to sell later this week, just ahead of the event. I am curious to know whom do they plan to sell and why would that someone be willing to buy when everyone is selling!!!

Strong rallies in gold and treasuries, and weaker USD are not corroborating a Fed hike or Brexit, either.

Nifty: Bull market confirmed, many questions unanswered

The new bull market in Indian equities is confirmed. The long term trajectory is also confirmed (100% gains in 3-4years).

But the rally is confounding and leaves many questions.

Usually bull markets begin from a "cheap" valuation point and is led by a new leader. Past two bull markets (May 2003-December 2007 and Jan 2011-Mar 2015) started from a low valuation point and were clearly led by Credit and Domestic Consumption respectively.

This is not the case this time. The markets are trading close to their long term average valuations. There is no clear sectoral leadership merging. Most sectors have almost equal number of gainers and losers. The universal gainers like Sugar, Chemicals are too small to lead the rally.

There is no great divergence between performance of benchmark indices and broader markets.

The traders and investors may not be trading or investing with high conviction unless the questions of valuation comfort and leadership are answered.

In the meantime, in strict technical sense, Nifty faces immediate resistance at 8330 level and a very strong resistance in 8550-8570 range. On the downside 7860-7930 has developed as a strong weekly support zone.

Expect Nifty to move in larger 7930-8330 range this week. The weekly range for Bank Nifty could be even higher at 16900-18000.