David Fuller's view China's monetary officials are becoming increasingly concerned with the trajectory of inflation figures and have been withdrawing liquidity over the last month in an effort to combat it. With the conclusion of the People's Congress tomorrow, a greater emphasis is likely to be placed on the new administration's ability to deliver on the structural reform agenda. Issues such as social security, health care, absence of property taxes, graft and the environment will be how its success is measured. To what extent they succeed will probably have a significant bearing on the stock market's recovery.

India's record of delivering on reforms was burnished last September when Prime Minister Singh abandoned his socialist coalition partners to push through his long-stalled agenda. The fact that non-food inflation is now improving is a substantial improvement and should give the RBI greater leeway to ease policy. The stock market is responding in kind.

As we address the price action from a purely aesthetic perspective, the Indian market is currently more attractive. The Nifty is in the region of its 2007 and 2010 highs and exhibits a rounding characteristic over the last two years consistent with accumulation. It posted a large upside weekly key reversal from the region of the 200-day MA last week and a sustained move below 5650 would be required to question medium-term scope for additional upside.

The Shanghai A-Shares rallied from early December until Chinese New Year in late January. This broke the previous progression of lower rally highs but it will need to hold the majority of this advance, during the current setback, if a return to medium-term demand dominance is to be confirmed. China has more attractive valuations but its capacity to outperform over the medium term is dependent on a structural reform agenda being successfully implemented. As ever, Governance is Everything.