Monday, July 21, 2008

Countdown Starts

The countdown has begun. The vote of confidence is in progress, yet it fails to instill any sense of confidence in the political machinery of India today. The blatant horse trading and the way deals have been negotiated has left one completely bewildered about the kind of politicians, supposedly the leaders, we have today. The actual trust vote is scheduled to happen tomorrow between 5-6 PM and till then, this pushing and shoving of MPs and volley of words is expected to continue.
Just as the majority of the Indians today do not know where the Govt is headed, the stock market is also a reflection of this same sentiment. Since morning, despite the falling crude prices and positive global cues, the Indian bourses are directionless. Trading is extremely choppy and more stock specific. The market has taken the news of Reliance Communication (Rcom) calling off the deal with MTN in its own stride. The stock risen and reposed its faith back into the stock.
Despite all the happenings in the corporate world, politics has taken over all. Till this cloud of uncertainty is not cleared, the mood will remain despondent, which is till tomorrow’s session. By late evening we will know the outcome and that will give the markets a sense of direction for trading on Wednesday.
At this point of time, getting the magic number of 271 seems daunting for the UPA. The way Mayawati has made herself the nucleus of this entire drama left everyone completely dazzled. Her rise to power, the fact that she is being looked upon as the next Prime Minister of India is amazing, albeit a tad difficult to digest.
There is one school of thought which says that looking at the immense compromises the UPA Govt is making to accommodate the nuclear issue, taking on proven criminals and allowing them to bargain their way, isn’t that a major comprise on national interest? The Patna High Court last week granted bail to Mohammed Shahabuddin to attend the special session of parliament. It also temporarily released Lok Jantantrik Party lawmaker Surajbhan Singh, while a lower court in Allahabad allowed Samajwadi member Atiq Ahmed to attend the vote. The Delhi High Court also gave permission to Rajesh Ranjan, alias Pappu Yadav, to attend parliament. One cannot help but raise the question of political morality here.
There is no doubt that India today needs the nuclear deal. We are sitting on a power crisis and we need to work on this nuclear to avoid blackouts. The Prime Minister has reiterated that the signing of this accord will allow India to import technology and fuel without joining the 1970 Nuclear Non-Proliferation Treaty. The deal will help India increase its nuclear generation almost 10-fold and will help end the power crisis.
The markets would naturally react positively if the UPA manages to get the required number of votes. But this positive would then once again get dependent on the inflation and crude oil numbers. So even if we see a rise, it could be shortlived. And if the UPA fails, the markets would fall and then wallow in self pity, letting itself drown in the inflation and crude oil figures.
But yes, what could indeed be a welcome scene would be the UPA winning the trust vote and the crude oil also slipping downwards. Now that will drive away the bears for sure! If crude continues to fall, inflation would automatically start showing signs of coming down. That’s a clear win-win situation, Let us wait and watch and see how the cookie crumbles!


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