So, will the above bill make any difference to endemic corruption in India? And, will foreign investments rise? Corruption increased in India over the last forty years because of a lack of proper mechanism to make perpetrators accountable. Hence the boldness of such large scams, eg, the $39 bn telecoms one being investigated. The Lok Pal, by appointing an independent Ombudsman with real powers to prosecute even high office, promises to be a catalyst for a long overdue clean up. And, will foreign investments rise in India which ranks 78th on Transparency International's latest corruption index, lower than rival China? One has to distinguish between portfolio investments (stock market) and Foreign Direct Investments (FDI). Portfolio investments saw a record inflow last year of some $29 bn. Procedures for foreign portfolio investors have been simplified considerably although they are still subject to some tedious reporting. FDI, on the other hand has dropped this fiscal year by 25% up to January to $17bn vs $23bn a year ago. Inconsistent policies, bureaucracy and recent corruption scandals have contributed to foreign investor enthusiasm waning. The Lok Pal Bill is good news for India as graft is cleaned up - for the country's image as it moves on its journey to become an economic power, for locals, especially the poor for whom paying bribes is an unnecessary tax, and for foreign investors who will display greater confidence

Eoin Treacy's view Any efforts to stamp out institutional corruption are to be welcomed no matter where they occur. In India corruption takes on a special significance because it has been one of the main complaints of invertors for quite some time. The other of course is the slow pace of infrastructure development and reform. However, despite official inertia, the private sector continues to perform admirably and the stock market has reflected this over the last decade.

The Nifty Index retested its 2008 peak in November and pulled back by almost 20%. This was the largest reaction in over two years but was not out of character with corrections posted between 2004 and 2008. When the Index fell back below its 200-day MA, questions began to be asked about the consistency of the medium-term uptrend. However, it found support above 5000, sustaining the progression of higher reaction lows, and rallied back above the 200-day MA three weeks ago.

Today's impressive upward dynamic, indicates an emphatic return of bullish interest. A sustained move below today's lows would be required to check current scope for some additional upside while the February low near 5150 would need to be taken out to question medium-term upside potential. The Bombay Banks Index, which has been a leader since at least late 2008 also rallied impressively today.

While India's upward dynamic was notable, the market has lagged somewhat when compared with its regional counterparts. The MSCI Asia Pacific Ex-Japan Index formed a ranging consolidation from early November in a relatively gradual reversion towards the mean represented by the 200-day MA. It found support and rallied four week weeks ago and hit a new recovery high last week. The Index is overbought in the very short-term but a sustained move below the MA would be required to check medium-term potential for additional upside. (Also see Comment of the Day on March 8th)