Chetan Sehgal, Director - Research

The most important issue now being debated is the future of the stimulus plans and when it would be appropriate to enunciate and implement an exit policy. The sound bytes from the Government on the exit plans would continue for long as they would not want to surprise the markets. To that extent, the market would be made well aware so that it is well prepared. Nevertheless corporate houses despite knowing the inevitable, would continue to hanker for more as if basic business is now helpless without government aid. In that sense, it would be better for the government to reinforce the basic tenets of the free market system. Getting the bankruptcy laws to function again would be a good reminder for the capital markets. India continues to surprise positively on demand as well as earnings and this should allow the Indian government to boldly embrace the exit strategies. While these exit strategies may be a near term dampner on earnings and sentiment, but the embrace would be positive in the long term for valuations, interest rates and currency. Corporate India must keep checking the mailboxes for the message, unless of course the markets correct and force the governments to hold back.