Eoin Treacy's view

"Governance is everything" has become a mantra at Fullermoney and the improving standards of corporate, civil and economic governance evident in India are a powerful tailwind for investors interested in the country. There has been a great deal of commentary on demographics in emerging markets being a positive force for economic growth but lowering the barriers to increased productivity for millions of new workers is at least as important. It is a point in India's favour that some of these obstacles are beginning to be tackled.

Infrastructure has long been India's Achilles heel, particularly when the country is inevitably compared to China. Progress on this front has been slow but is picking up pace. At least part of the reason that China is now focusing on moving up the value chain in manufacturing, investing in healthcare and developing the consumer economy is because the cost/benefit ratio for more infrastructure development is not nearly as favourable as it was because so much progress has already been made. India is at the opposite end of the spectrum. It already has a reasonably well developed internal market and a number of companies with dominant positions in high value added industries and services. India's infrastructure is coming from a low base so a comparatively small improvement can result in a large productivity boost. Provided the trajectory of improvement continues, it will remain a tailwind for long-term investors.

The wider market Bombay 500 rallied impressively today to test the 7500 level while both the Sensex and Nifty broke upwards from short-term consolidations in the region of the upper sides of their 10-month ranges. Downward dynamics would now be required to check potential for additional upside while sustained moves below the respective 200-day MAs would be needed to question the consistency of their medium-term uptrends.