Equity markets are not quite in the doldrums but support from global economic data is not exactly consistent. India meanwhile has been waiting for the new government’s first budget and confirmation of a commitment to restoring growth. Over two weeks, the Nifty has shed 33 points for a loss of 0.4%, closing at 7509 after trading in a range of 3%. Average daily trading volumes have been subsiding from recent highs in the $4-5bn range towards the low $3bn level. Nifty futures closed today at a premium of 1.5% to cash.
The Indian government has initiated some fairly aggressive moves to attack food inflation with set minimum export prices for onions and potatoes which have already led to improved supply in Delhi and Mumbai. States have been advised to allow free movement of fruit and vegetable and de-list these items under restrictive agricultural marketing laws so that the ability of middlemen to hoard will be reduced. Losses on diesel fuel have been reduced to Rs1.6 per litre; if monthly increases continue and the Rupee holds, this means that the price of diesel can be decontrolled by September. The new Petroleum and Natural Gas Minister, addressing a conference in Moscow, has said there will be new policies aimed at encouraging FDI in exploration and development with a view to getting international operators to take an interest again.