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  • Egypt Crisis May Impact Policy, Says Gokarn: Mehul Shah Mumbai, 6 February

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    1) Political unrest in Egypt and rising inflation are causing foreign investors to sell Indian shares, resulting in over a 12% decline in the Sensex and Nifty indices so far this year. 2) Events in Egypt are impacting oil prices and will influence the RBI's monetary policy thinking and actions going forward. 3) Foreign investors have pulled out $1.21 billion from Indian markets so far this year due to concerns about emerging market inflation and the turmoil in West Asia driving up oil prices.

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    1) Political unrest in Egypt and rising inflation are causing foreign investors to sell Indian shares, resulting in over a 12% decline in the Sensex and Nifty indices so far this year. 2) Events in Egypt are impacting oil prices and will influence the RBI's monetary policy thinking and actions going forward. 3) Foreign investors have pulled out $1.21 billion from Indian markets so far this year due to concerns about emerging market inflation and the turmoil in West Asia driving up oil prices.

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    9 views1 page

    Egypt Crisis May Impact Policy, Says Gokarn: Mehul Shah Mumbai, 6 February

    Uploaded by

    ak123umt
    1) Political unrest in Egypt and rising inflation are causing foreign investors to sell Indian shares, resulting in over a 12% decline in the Sensex and Nifty indices so far this year. 2) Events in Egypt are impacting oil prices and will influence the RBI's monetary policy thinking and actions going forward. 3) Foreign investors have pulled out $1.21 billion from Indian markets so far this year due to concerns about emerging market inflation and the turmoil in West Asia driving up oil prices.

    Copyright:

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    of 1

    Inflation, Egypt

    unrest likely to
    keep FIIs away
    MEHUL SHAH
    Mumbai, 6 February
    Egypt crisis may
    oaring inflation and po- impact policy,
    S litical unrest in Egypt will
    continue to haunt Indian
    shares in the near term, prompt-
    says Gokarn
    Events in Egypt would have
    ing a further selloff from over- an impact on the monetary
    seas investors, reckon experts. policy, the Reserve Bank
    India’s key stock market in- of India’s deputy governor
    dices – the Sensex and the Nifty said on Sunday.
    – have lost more than 12 per “After making the pol-
    cent so far this year, the worst icy announcement on Jan-
    performance among all emerg- uary 25, a whole set of
    ing markets. On Friday, the events have unfolded in
    Sensex barely managed to hold West Asia, which are start-
    above 18,000, while the Nifty ing to have an impact on
    ended below 5,400. oil prices, which we ob-
    “Rising food prices and in- viously did not anticipate
    vestors’ concern regarding in- at the time we made the
    flation in emerging markets have announcement,” Subir
    been the main reasons why the Gokarn, deputy governor
    emerging markets trade has at the central bank, said.
    struggled recently,” Maarten- “So, a completely new
    Jan Bakkum, global emerging environment has emerged
    markets equity strategist at ING in a very short time after the
    Investment Management, said announcement. It is going
    in a note. “The end of the emerg- to have an impact on our
    ing market (EM) monetary pol- thinking, our action in fu-
    icy tightening cycle needs to be ture,” he added. REUTERS
    in sight before the markets start
    embracing the longer-term ‘EM
    superior growth’ theme again,” index climbed 11.61 per cent
    he added. in the year to January 22, data
    For the week ended Feb- released on Thursday said.
    ruary 2, India-focused equity To tame inflation, the Re-
    funds suffered the largest week- serve Bank of India was ex-
    ly outflow since early June pected to raise rates by at least
    2010, according to EPFR Glob- 75 basis points in the financial
    al, which tracks fund flows in- year ending March 31, 2012,
    to world markets. said Indranil Sen Gupta, di-
    Foreign institutional investors rector and chief India econo-
    (FIIs) have net sold Indian shares mist at Bank of America (Bo-
    worth $1.21 billion (`5,523.50 fA) Merrill Lynch.
    crore) this year till February 3, Technically, too, the market
    according to Securities and Ex- has not bottomed out yet, say
    change Board of India data. experts. “We are in the mid-
    According to Bakkum, re- dle of a bear market. Consid-
    cent developments in Egypt have ering history, the market should
    added to the nervousness about bottom out in the next one-two
    emerging markets, as turmoil months,” said Deepak Mohoni,
    in West Asia pushes oil prices founder of Trendwatch (India),
    higher. This is a major concern which predicts market move-
    for a country like India which ments based on technical analy-
    imports more than two-thirds sis. “The Sensex and the Nifty
    of its oil requirement. are likely to find support well
    India’s food price index rose before the 16,000 and 4,800 lev-
    17.05 per cent and the fuel price els, respectively,” he said.

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