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Momentum with the bulls – Market Watch

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Sensex down

The week gone by behaved on expected lines and made an intraday low on Thursday before bouncing from there and registering very sharp gains in the remaining less than two days of the week. BSE SENSEX gained 429.10 points or 1.38 per cent to close at 31,588.72 points while NIFTY gained 154.85 points or 1.70 per cent to close at 9,266.75 points. The broader markets saw BSE100, BSE200 and BSE500 gain 1.98 per cent, 2.15 per cent and 2.38 per cent respectively. BSE MIDCAP was up 3.95 per cent while BSE SMALLCAP was up 4.93 per cent.

The intraweek low made on Thursday on the BSE SENSEX was at 30,016 points, which was a loss of 1,140 points till then, while it was 8,821.90 points on NIFTY, a loss of 290 points. The recovery from the intra week lows in less than two days was 1,570 points on BSE SENSEX and 445 points on NIFTY. This momentum has steam and would carry the markets higher in the coming week and it would be worth watching how far this rally can go before profit taking steps in.

One must remember that the markets are like a patient and are yet to recover fully. What we are witnessing is relief rally, oversold rally or a rally by any other name that you can think of. Fundamentals of the market are yet to kick in and they would do so only when covid-19 is under full control and one can say that life has normalised.

The Indian Rupee after being extremely volatile settled with a marginal gain of 4 paisa or 0.03 per cent to close at Rs 76.39 to the US Dollar. Dow Jones had a good week and gained 523.12 points or 2.21 per cent to close at 24,242.49 points.

RBI cut reverse repo rates by 25 basis points to 3.75 per cent from the earlier four per cent, signalling to the market that banks should lend and that the system is full of liquidity. Whether banks will lend is a million-dollar question as the 90-day moratorium is a contentious issue going forward and complete clarity on provisioning norms post the 90 day are yet to emerge.

HDFC Bank reported an excellent set of numbers even considering the fact that it was only the last fortnight of March 2020 that was impacted by covid-19. The net profit for the 4th quarter rose 18 per cent to Rs 6,928 crores.

The government has restricted the investment by neighbouring countries in Indian companies under the automatic route and they would have to now invest under government route and not under the FDI policy. This has been issued after PBOC, raised its stake in HDFC Bank from the earlier 0.8 per centto over one per cent. SEBI raised queries on such investments and this was followed by the government release.

SBI Card which was an extremely hyped and controversial issue, completed thirty days of being listed on the bourses. This 30-day period is significant because the allocation to anchor investors comes with a 30-day lock-in. On completion of the same, anchor investors are free to sell. The share which was issued at Rs 755 and had created huge hype and demand and was oversubscribed 26.49 times overall saw its share touch a low of Rs 501.10. This means that the share has lost a third in value and the issue was oversubscribed 56.66 times by QIB”s and they have a reasonable time frame view on the share unlike the HNI, whose investment horizon is less than 48 hours. This loss is without considering the grey market premium which varied between 225-275 for about three months prior to the issue and touched a peak of just short of Rs 400. Understandable that covid-19 has impacted the business of SBI Card as well but to what extent? The share did recover from the lows to close at Rs 530.70, a weekly loss of Rs 64.15 or 10.78 per cent.

Coming to covid-19, the total number of cases globally have risen to 23.33 lac cases with there being 1,60,818 deaths and over 6 lac patients recovering. In India the number of affected persons has increased to 16,365 cases with 521 deaths and 2,466 patients having recovered. There seems to be a larger number of patients recovering than before which is a positive sign.

Coming to the markets in the week ahead, the momentum of the last two trading sessions will keep the market going in the initial part of the week after which there would be profit taking as well. This does not mean that this would signal the end of the rally but then markets would look to the expiry of April futures and how the relaxation of lock-down and reopening of factories happens. The rally should be more than what was gained on a weekly basis in the previous week before the profit taking.

In conclusion, a rally followed by profit taking and then cues from the lockdown to determine the flow of the market in the week ahead.

(Arun Kejriwal is the founder of Kejriwal Research and Investment Services. The views expressed are personal)

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Xi Jinping: The Chinese Hitler leading PRC to disaster

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Chinese President Xi Jinping is unfairly using early recovery from pandemic for external encroachment and internal consolidation.Chinese aggression in all domains will be rebuffed globally, led by powers suffering the most.

Xi Jinping”s over ambition and lust for power has been emboldened by mute tolerance in CPC and PRC. His adventurism is leading China to disaster, unless the Chinese reins its leadership.Backdrop

History is full of examples whenever the ambition of any autocrat grew beyond global tolerance, he became responsible for collapse of his regime, resulting in disaster of the country and population, which emboldened him by mute tolerance. Today, despite facing unprecedented global anger for being the originator of novel coronavirus, the aggressiveness of Chinese leadership on multiple fronts to suppress internal and external dissent has pushed the world against itself. Xi Jinping”s unfair adventurism for incremental encroachment to all his ever increasing claim areas in continental and maritime domain, at a time when other countries are suffering from most dangerous pandemic of the century, with death toll rising every day, is amounting to inhuman aggression, junking all morals, international conventions, rules, treaties and forcing the world to reluctantly react against his regime.

Xi Jinping”s Overambition

Xi started his term by dream-selling to pull China out of poverty line by 2020. Internationally he projected himself as the crusader for world peace and climate change(despite junking the ruling of PCA and violating UNCLOS), with a resolve to push through Belt and Road Initiative (BRI) to fulfil Chinese dream of rejuvenation, after century of humiliation. As ”Chairman of Everything” he indirectly declared himself as the tallest leader on the planet, got himself re-elected for second term and did everything to make himself great, under the banner of ”Making China Great”. He assumed that the world will accept him as tallest autocratic leader, as Chinese people accepted him, without worthwhile checks and balances. His anti-corruption drive systematically eliminated the entire dissenting elements and all his possible competitors.

China: Boiling Pressure Cooker with no Safety Valve

Xi took over in 2012 as President with 7.9 per cent GDP growth and led China to economic downslide thereafter. With failing BRI, mishandling of COVID-19, there is no worthwhile achievement to his credit except that he managed to eliminate dissenting elements. His critiques in the CPC feel that his real achievements do not match his elevation to the status of MaoZedang, which has created some disgruntled elements/lobbies, who are still under check due to his comprehensive surveillance, because disagreeing with Xi ”The Core” is anti-national and leads to jail.

It is quite clear to Xi Jinping and CPC, that if he fails economically, and the educated people of China don”t get a decent life, they may not tolerate his autocracy, having no worthwhile grievance redressal mechanism and the democratic winds will start flowing from Hong Kong and Taiwan. The legal system stands hostage to party leadership justifies the boiling pot theory; hence the biggest threat to China comes from within. Some of his actions like laying restrictions on religious practices on Uyghurs” and their forced abortions in Xinjiang, use of force in implementing draconian National Security Law in Hongkong are too risky. The strict censorship of media and internet, electronic isolation, social engineering to bring societal changes are unpopular steps to minimize unrests.

Why over-ambitious Xi Opening Multiple Fronts?

The viability of ”Implosion theory” is feared to be a reality by a totalitarian regime; hence a dose of nationalism nurtured through external aggression, suits Xi Jinping”s hold on power, besides making best use of early recovery from COVID-19 in comparison to his competitors. China has unfairly used it as an opportunity to assert itself on multiple fronts, including India-China land borders to scrumptiously encroach some area not supposed to be held, as per the mutually agreed CBMs, where both sides were free to patrol. This is a sequel to the Chinese adventurism in Indo-Pacific at multiple places in South and East China sea with greater assertion against other claimants like Vietnam, Indonesia and Philippines. The rationale of China being over assertive at the time of pandemic comes from Sun Tzu”s thoughts of ”Strike adversary when it”s weak and preserve yourself when it is strong”. China is therefore speeding up its Incremental Encroachment Strategy in South China Sea as well as LAC.

The strategic calculations seem to be ambitious, as in authoritarian state, the sycophancy prevents leaders getting objective advices from subordinate strategists. When Hitler launched offensive in Russia in World War II, beyond its logistics limit for sustaining in winters, he overruled advices of subordinates and brought Germany to disaster.

In case of China, Xi emboldened by modernised arsenal and extensive exercises and propaganda is planning to take on some of the most experienced troops, despite not having a single pilot in the PLA with any operational experience. While its density of arsenal in South China Sea and Eastern Sea board looks impressive, but its vulnerability of long Sea lanes of Communications in Malacca strait and the Indian Ocean, coupled with blockading of its naval bases by hostile navies can draw out PLA out of its comfort zone, where it is no match to combined navies of hostile countries, including the US spending four to five times of China on defence over so many decades. The strong military posturing by navies from the US, Australia, Japan, and regional claimants of South China Sea enough for deterrence and accidental engagement, because an all-out war is recipe for mutually assured destruction (MAD), which even Beijing cannot afford given the fact that it faces potent nuclear and space power.

Contours of Undeclared Third World War

The forced occupation of landmass by China in terms of features in South China Sea claimed by others junking PCA ruling, has graduated to skirmishes. The dimensions of warfare to include economic war, cyber and information war, biological war by asymmetrical impact of COVID-19, resulting many more deaths than all world wars put together, large scale military posturing in Indo-Pacific and physical land grab offensive by China in Ladakh, using pandemic as a weapon.

The possible alliances also seem to be on the horizon seemingly China, Pakistan and North Korea taking on competitors of China and everyone else in the world not agreeing to Chinese narrative. The current global situation has every element of a World War, except that the dimension, instruments and modalities have changed from conventional war, and the war has not been ”Formally Declared”; hence it may well be called as ”Undeclared Third World War with Changed Instruments and dimensions”. The world has already entered in preparatory phase of it, without recognising it to be so.

Pattern of Global Reaction

In continental domain its land grab efforts in Ladakh have been rebutted by India, which honoured its 20 fallen soldiers with state honours, whereas the PLA chose to hide its fallen soldiers much more in number, creating another wave of anger amongst the PLA veterans. The mutual disengagement is being viewed with suspicion as PLA demonstrated its unprofessionalism to the world by using barbaric tools for attacking Indian soldiers, junking the CBMs and yet bought heavy casualties. India is certainly not going to take mini disengagement gestures for granted, unless PLA withdraws to pre-standoff positions; hence will be ready to respond with all options on the table.

In maritime front, the US has already demonstrated strong military posturing. The ASEAN, which was muted by China so far, by consolation of draft Code of Conduct and purse diplomacy, combined with coercion due to large power asymmetry, seems emboldened to talk about UNCLOS, demanding fair share of EEZ of affected countries. Taiwan, emboldened by national sentiments, leadership, the US support through Taiwan Relation Act and NDAA has started identifying itself as a nation, junking ”One country Two systems”, ready to defend itself should a situation arise, besides granting asylum to willing people from Hong Kong. Japan is looking for strengthening its defence capabilities. Some more adventurism by North Korea may see Japan going nuclear in future. Xi Jinping”s ambition has costed global loss of trust and some important markets for China. Russia and Iran have a forced marriage with China, due to sanctions from the West, but given the geo-strategic situation, playing neutral, along with sale of weaponry/oil may be the best option for them.

China may be able to implement the draconian National Security Act in Hong Kong, but global reaction is unavoidable. China has to bear the cost of demise of its financial hub, with many countries inclined for economic distancing, shifting FDI, banning concessions granted to Hong Kong, granting citizenship to those willing to exit, thus creating ideal conditions for urban insurgency in times to come, besides the rural insurgency of Xinjiang. Suddenly the voices in support of Uighurs and Tibetans and questions on ”One China Policy” have started becoming active, notwithstanding the threats of Chinese wolf warrior diplomats.

Future of China under over-ambitious Xi

Xi Jinping”s Chinese dream of ”Rejuvenation” and his aim of ”Prosperous Developed Society” with a ”War Winning Modern PLA” by 2050 was achievable, had he not harboured dictatorial over ambition to achieve these aims and dislodge the US as a superpower, making unfair use of pandemic. In fact, the first major conversion of features in South China Sea to military bases took place during the last US elections, with no big bang action from the US. This emboldened Xi to use pandemic unfairly to fulfil all his aims before time, without having capacity to protect its global shipping outside its eastern seaboard. With the kind of global anger he has generated against his regime, the lesson of diversification of global factory for the world, along with need of economic distancing from China has become evident. Xi has thus pushed his country on a path to disaster unless Chinese people wake up and shake up the CCP and rein their leadership to protect their dreams.

Takeaway for India

From the Indian perspective, this is the time when Beijing is under maximum external and internal pressure since last five decades. If Beijing continues with its high headedness, it will invite further pressure. This may well be the time to push through border settlement or demarcation of LAC as the political cost of resolving the border/LAC may be lesser than an active front with India. India should not settle down with token disengagement because unless the LAC is demarcated the standoffs will continue. For the time being India should not blink at the borders.

(Major General S. B. Asthana, SM, VSM Veteran is the Chief Instructor, United Service Institution of India. The views expressed here are his personal views.)

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Australia, Japan and United States join hands to counter China’s use of force in South China Sea

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South China Sea-WEFORNEWS-min

Washington, July 8: To sternly counter China in South China Sea, The defence ministers of  Australia, Japan, United States has reinforced strong opposition to the use of force or coercion to alter the status quo  of the region, and called on to uphold the freedom of navigation and overflight.

Australian Minister for Defence Linda Reynolds, Japanese Minister of Defense KONO Taro, and U.S. Secretary of Defense Mark Esper convened a virtual trilateral defense ministerial meeting on July 7.

Concerned about the recent incidents, including the continued militarization of disputed features, dangerous or coercive use of coast guard vessels and “maritime militia”, the leaders of three countries said no country can disrupt other countries’ resource exploitation activities.

They emphasized the importance of peaceful resolution of disputes in accordance with international law, in particular as reflected in the United Nations Convention on the Law of the Sea (UNCLOS), and called for all countries in the region to take meaningful steps to ease tension and build trust. 

The ministers also called “for any Code of Conduct in the South China Sea to be consistent with existing international law, in particular as reflected in UNCLOS; not to prejudice the interests of third parties or the rights of any State under international law; and to reinforce existing inclusive regional architecture”.

This comes after USS Nimitz and the USS Ronald Reagan along with their accompanying vessels and aircraft conducted exercises “designed to maximize air defense capabilities, and extend the reach of long-range precision maritime strikes from carrier-based aircraft in a rapidly evolving area of operations.”

The Nimitz and Ronald Reagan strike groups conducted several exercises and operations to strengthen warfighting readiness and proficiency in an all-domain environment. Integrated operations included air defense exercises, tactical maneuvering drills, simulated long-range maritime strike scenarios, and coordinated air and surface exercises to maintain combat readiness and maritime superiority.Our forces provide combatant commanders with significant operational flexibility to respond to regional contingencies.”

Captain Michael Rovenolt, commanding officer of Carrier Air Wing (CVW) 5, said, “Working together with another Carrier Air Wing provides advanced opportunities for our squadrons to conduct high-end training, and increase our warfighting readiness…Our forces provide combatant commanders with significant operational flexibility to respond to regional contingencies.”

Working together with the Ronald Reagan carrier strike group provides advanced, high-end training opportunities that increase our warfighting readiness,” said Capt. Todd Cimicata, Commander, Carrier Air Wing 17.

In reference to the 2019 Australia-Japan-United States Trilateral Strategic Action Agenda, the ministers directed their respective officials to continue to pursue avenues for practical engagement, cooperation, and interoperability in a time of geostrategic change.

This joint statement by trilateral countries provides an impetus to the joint statement issued by the members of the ASEAN bloc expressing concerns over the current situation in the South China Sea.

The ASEAN leaders stressed the importance of maintaining and promoting peace, security, stability, safety and freedom of navigation and over-flight above the South China Sea, as well as upholding international law, including the 1982 UNCLOS, in the South China Sea, working actively towards the full and effective implementation of the 2002 Declaration on the Conduct of Parties in the South China Sea (DOC) in its entirety.
US Secretary of State Michael Pompeo had said that the US has sent a letter to the UN Secretary-General to protest China’s “unlawful South China Sea maritime claims”.

Defence Ministers also agreed to coordinate to ensure to deter destabilizing or coercive unilateral actions that could alter the status quo and increase tensions in the East China Sea.

The ministers underlined the instrumental role of ASEAN in facilitating regional dialogue and establishing norms of behavior that support stability, security, and prosperity in the Indo-Pacific region, and recognized the importance of supporting partners in South and South East Asia. 

The ministers emphasized their ongoing support for ASEAN centrality as a key contributor to regional security and prosperity.

By Arti Bali  

Sr Journalist (International Affairs)

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Column: Prime Minister sets the record straight – Spy’s Eye

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Modi in Leh

It is now clearly conveyed to the nation that India had put China on notice for its recent aggressive conduct on LAC and warned it of serious consequences of any further misadventure it might be planning against this country. Prime Minister Modi in his ”Mann ki Baat” on June 28, which is like an address to the countrymen, talked of India”s strong resolve in dealing with the military face-off with China on the LAC in Ladakh and gave out that ”a befitting reply had been given to those who cast an evil eye on India”s territory”. He added that ”India can handle friendly relations but also knows how to look into the eyes of anyone who challenged its sovereignty”.

Giving an insight into India”s strategy, the Prime Minister informed the people that among other things India was taking measures to become self-reliant in various spheres, including indigenous production of defence hardware to meet ”exigencies of national security and sovereignty”. India has since stepped up border infrastructure development on our side of the LAC as well as mobilisation of troops on the ground — apart from readying our Air Force and Navy for defensive action against any external aggression. The message given to China is loud and clear — stay off from giving any provocation by attempting to encroach on any point of disputed territory along the LAC. Defence of Ladakh is geared up in line with the declared stand of the Modi government that Aksai Chin had been illegally occupied by China and that this matter had to be set right. That India will stretch China on various fronts — economic and geo-political — is emerging as a strategic element of India”s long-term response to the current hostility of this neighbour.

While the situation on the LAC is still evolving, India has from its side confronted China with the demand of return to the status quo ante and engaged that country in border talks at the level of Core Commander on disengagement and deescalation. The government, meanwhile, is keeping up military and foreign policy endeavours to prepare for any aggravation. It is in this background that Prime Minister Modi, in a brief address to the nation on June 30, did not touch on China and confined himself to an announcement of extension of free ration scheme covering nearly 80 crore people for five months — till November end — giving them relief in a difficult time to see through Diwali and Chhat festivals. An added facility of using ration cards on an all- India basis was promised.

The Prime Minister reiterated the need for total caution during the Unlock-2 against corona. He came off as a compassionate leader who appeared to be giving priority to the internal scene relating to people in distress and by not bothering the latter with the issue of India-China tension on the border, also giving a message that his government was fully in control of things on that front. Since the majority of migrants belonged to UP and Bihar, what is the harm if the PM made a mention of the two major festivals of North India in his address to bring some cheer to this distressed lot? Hopefully, the sense of nightmare that crores of migrant labour experienced in the lockdown would be eased substantially — though the crisis of unemployment looming large for them would still confront them. Importantly, the Modi regime remains firm on building the economy indigenously by emphasising the idea of ”be vocal for local” and encouraging entrepreneurship and start-ups. Internal stability in India will be determined by the economic recovery.

Coming back to the issue of China”s aggressiveness on the border, it is clear that three aspects of the situation deserved to be taken note of in framing a long-term strategy of dealing with that country. First is the unmistakable fact that the intensification of cross-border terrorism in Kashmir by Pakistan and the military build-up on LAC started by China in the period following the abrogation of Article 370 by India, showed a new level of meeting of minds between these two allies against India — that was part of their bigger geo-political plan of acquiring a firm hold in the crucial Pak-Afghan-Kashmir tri junction. This territory anchored the superpower rivalry in the Cold War era for control of this region — a lesson China would remember as it positions itself as the other superpower in the present, conscious of the advantage it has of having Pakistan on its side. India has to weaken this alliance by carrying the anti-terror combat into the POK and damaging the CPEC where it would hurt China the most. China can create some more mischief on LAC in support of Pakistan but this is nothing that India”s army would not be able to handle.

Secondly, this is the moment for India to build the opinion of the entire democratic world against the dictatorial Chinese regime that was out to disturb world peace in chasing its blatant plans of dominating the world militarily and economically — as a new superpower. India must make it a point to highlight the role of Sino-Pak axis in fomenting terrorism of the Islamic radicals and using it as an instrument of political advancement through proxy wars and cross-border operations. For securing India”s interests in a peaceful and democratic Afghanistan, we should further strengthen bilateral relations with Russia, Israel and Iran in working for a place in the ”round table” convened to discuss that country”s future — at a time when the US is being expedient about accommodating the Taliban in power there. Fortunately, we have in the NSA and the EAM a very competent, experienced and knowledgable set of people who can achieve the international outreach that India presently needs to counter and override the challenge posed by the China-Pakistan combine.

Finally, it is in the realm of economic relations that India has to find ways and means of scuttling the economic power that China had tried to wield against its opponents, including India. In fact, the tough response of President Donald Trump on the US-China trade imbalance and the more recent US-led campaign against China”s alleged culpability in hiding information relating to corona pandemic from the world — India being on the side of the US in these matters — substantially accounted for the precipitate hostility of China towards India. India”s rightful offer to the businesses seeking to shift away from China, to relocate here added to the Chinese desperation which was reflected in the aggression on LAC. Tension on the borders was intended to project India as a land of conflict and distract global investors from this country. As important as the marshalling of defence preparedness against China, therefore, are the moves of India to battle with the latter on the economic turf. India has set the ball rolling by banning some 59 Apps of Chinese origin and linking it with the call for development of indigenous products and services to make India self reliant in all fields, including defence production.

Prime Minister Modi has clearly embarked on a comprehensive strategy of military consolidation, economic recovery and deeper collaboration with friendly powers to deal with the emerging challenges — particularly the threat posed by China in the immediate and long range. India”s relations with China of Xi Jinping can become irreversibly antipathetic unless China strikes a peace chord by retracing its steps in Galwan valley. People must rally behind the effort of Modi regime to safeguard national security and integrity — at a time when the corona pandemic has compounded the problems of the common Indian at home. Prime Minister Modi in his address on June 30 acknowledged the silent contribution of the farmer and the tax payer to the well-being of the nation. It is a matter of satisfaction for the nation that the Prime Minister has shown a rare capability of handling multiple crises with calm and confidence.

(The writer is a former Director Intelligence Bureau)

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