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The Ebbing Tide

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It was another bad day at the market today as the BSE Sensex fell 2.3 per cent, its biggest slide in nearly three weeks, amid fears about slowing growth and policy paralysis as well as uncertainty over whether the euro zone can agree on how to resolve its debt crisis.  Added to this potent combination was the Opposition demanding that Home Minister P Chidambaram step down and the market tasted mayhem with the Sensex sliding 389 points while the NSE index Nifty plunging 119 points. Moreover, hopes of a functioning Parliament after sacrificing retail reforms were belied as the Opposition kept the government under fire on Chidambaram and price rise issues, leading to early adjournment.

Even a piece of good news like the easing of food inflation to a three-and-a-half year low of 6.6 per cent had no effect on the market. Reports of the industrial output likely to move into negative territory further dented the market. After a weak start, the Sensex dropped 388.82 points, or 2.30 per cent to 16,488.24.

Marketmen said there were doubt among investors that the EU summit on Friday will be able to tackle the region's debt problems. Pressure was also put by the brokerage firm CLSA lowering 12-month target for the benchmark, citing earning cuts.

The Sensex heavyweight Reliance Industries dropped 3.71 per cent and second-heaviest Infosys lost 1.06 per cent to Rs 2,723.75. The two carry over 20 per cent weight on the Sensex.

"The market will be quite volatile for the whole week starting today. There will be pressure on the downside," said R.K. Gupta, managing director of Taurus Asset Management.

"The market is playing in a very cautious zone and people would not like to take long positions because there are a lot of important issues coming up in the next five to six trading sessions," Gupta said.

India's industrial output and inflation data are due next week, while the RBI will review monetary policy on December 16.

FM Takes Global Line
Finance Minister told the Parliament that India's exports and foreign direct investment  inflows have been hurt by the global slowdown. India's October exports growth slowed to 10.8 per cent to $19.9 billion, from high double-digit growth in the early months of the current fiscal year that ends in March 2012.

He also said the country cannot afford to have near double-digit inflation. He, however, said recent readings of food inflation was encouraging, citing the latest weekly food inflation rate, which fell for a fifth straight week.

But Mukherjee's arguments failed to cut ice with the Opposition. The government came under sharp attack on the issue of price rise with the Opposition accusing it of failing to curb inflation and the BJP even asking it to quit if it fails to "find a way out" of the current situation.

Swaraj also accused the government of "doling out" figures and statistics when the "hungry actually need food".

Leader of the Opposition in Lok Sabha Sushma Swaraj accused the government of pursuing wrong economic policies, while Gurudas Dasgupta (CPI) said the seasonal reprieve from inflation should not work as a respite for the government which should aim at brining down inflation in
the long term.

Referring to Finance Minister Pranab Mukherjee's statement 'I don't know where this country is going' made after a man slapped Agriculture Minister Sharad Pawar, Swaraj said it was the duty of the government of the day to find a way out.

"...You find a way. If you cannot, leave the chair and then we will show the way," Swaraj said,  winding up her speech on a discussion on inflation.

Nothing Against Chidambaram: Govt
Rejecting the opposition demand for resignation of Home Minister P Chidambaram, Law Minister Salman Khurshid on Thursday suggested there was nothing in the Delhi court observations against him or the government.

Asserting that Government is firmly behind Chidambaram, he said, "Chidambaram is in the Government. He is part of the Government and we are all part of the Government and we all stand together."

His statement came after opposition disrupted Parliament following a Delhi court allowing Janata Party Chief Subrahmanian Swamy to depose as a witness and lead further evidence in support of his complaint against Chidambaram in 2G case.

India Redux? Not Now
So where does India stand now? A market favourite and member of the ever stronger BRIC group,   global investors have started showing their unhappiness with the slower-than-ever pace of reforms in India.

Goldman Sachs Asset Management Jim O'Neill, the man who coined the term BRIC for the emerging market giants — Brazil, Russia, India and China —  says India's record on productivity, FDI and reform has been the most disappointing. United Nations data shows that India received less than
$20 billion in FDI in the first six months of 2011, compared to more than $60 billion in China while Brazil and Russia took in $23 billion and $33 billion respectively.

The glacial reform pace has hit India's hopes for double-digit economic growth, O'Neill said,  adding: "India is as bad as Russia is on governance and corruption and, in terms of use of  technology, Russia is in fact much higher than India."