Ideas from across Macquarie and beyond … buy Reliance Industries

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��'

Guanxi
Ideas from across Macquarie and beyond …
Inside
The dollar   History suggests it is difficult for Asian stocks to do
well in a strong dollar environment. But on closer analysis, their inverse
relationship only exists since 1998, and 2 of the 3 dollar rallies since then
were during times of crisis. The one that was not – 2005 – also saw Asian
stocks rise. Dollar and Asian stocks can go up together. That’s good news,
for 3 reasons:

(1.) Europe  . Europe’s travails were overshadowed by QE2 but never
went away. CDS spreads are testing the ECB’s resolve to back senior bank
debt. President Trichet has been a buyer of that debt, but will likely be replaced
by Bundesbank president Weber in October next year, who is vehemently
against such purchases. A weaker Euro would mean a stronger dollar, given
its 57% weighting in the dollar basket.

(2.) US politics   In the US, the same divide exists on how much the
rich should support the poor, with the Fed and its pro-stimulus ―Keynsian‖ allies
in one camp, and the ―Austerians‖, who say spending and debt levels should be
reduced even during times of weakness, on the other. On balance it seems more
likely than not, that policy will be less easy next year, which is also dollar-bullish.

(3.) Manufacturing and cycles  . Macquarie now forecasts US
GDP growth in 2011 at 3.5%, vs. the consensus at 2.5%.

Plus: Reliance Industries   India’s largest stock
underperformed the NIFTY by ½ over the past 2 years; it should outperform
in 2011