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Update from Research Desk on Revival of Reforms
September 17, 2012

The Government has come out with reforms to revive the economy. This has led to positive sentiments in the market.

Author : Dr. Renu Pothen

Update Monetary Policy_Sept2012

Update from Research Desk on Revival of Reforms

Indian markets ended on a happy note on Friday evening and investors on Dalal Street started partying on the back of the positive signals send by Bernanke and team Manmohan. To add to this, late in the evening, the UPA Government after a long time of inaction seemed to have pulled up their socks and announced further reform measures to revive the growth momentum of the Indian economy. The government headed by the architect of India’s economic reforms had come to power with a lot of expectations, but the policy paralysis and the corruption scandals had tarnished the image of team Manmohan. However, with the change of guard at North Block, UPA government seems to be determined to implement these reforms and is continuing to send positive vibes to the markets.

The mood on Dalal Street seems to be good with fund managers and analysts having raised their expectations from the markets. In this scenario, with portfolios in green after a long time, the question that is making investors restless is “Can we start booking profits at this stage or should we wait for some more time?” Our advice is if the investments have been made with the intention of achieving a goal; don’t get too excited over the current market rally. For others who have the feeling that they have missed the bus, we are of the view that time is not lost and they can still take fresh positions on every dip. As for our fixed income investors, in line with our view on rate cuts, we continue to advice investors to stay put in short term funds and dynamic bond funds.

Dr. Renu Pothen
Research India

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