The BRICS summit was concluded yesterday in Delhi . This initiative has come about in back-drop of some concerns commonly faced by the nations involved i e Brazil,Russia,China,India and South Africa. They have addressed the issue of reducing the importance of Dollar in the area of mutual trades between these nations which happen to represent not less than 42% of worlds population. What I feel is that China has been more in need of some ways to see dependence on dollar to reduce. It has many trillion strong dollar reserves and is jittery at the fact of dollar’s diluting value .It is to be noted that the conclave was attended by no less than the Presidents of four countries themselves along with our Prime Minister.
These nations have resolved to establishing a development bank for financing projects in these and other developing countries. It is clear that China is trying to find some means to suitably deploy its surpluses held in foreign currencies. the US is near to China for some reasons exclusive to those two countries and is near to India for some reasons exclusive to US and India. Similarly other nations have unique equations with US. But , every one of these nations is finding hard to adjust to mercurial policies of US in respect of many issues and want to have some platform to be able to announce a separate line of thinking without being seen as confronting the US.
One such matter is Iran related where the US wants everybody to be wary of its nuclear related ambitions and in the process impose sanctions etc.. This may suit US but it is some thing absolutely not likable to India , China and the rest as this will put pressure on petroleum availability . India and China both rely heavily on imported oil and they have to keep the supply lines open from all sources at all times. There has been a common approach in appreciating right of Iran as far as developing atomic option for peaceful purposes.
In the mean time the GAAR impact is going to be moderated by the govt about which PM and FM have made some statements. The rules may eventually be framed in a way that the FII investment is affected in the least. The points I have raised may have been responsible for the a decent upside move in Nifty which close above 5300 scoring about 2.5% gain in trading just today. In my post earlier this week under the heading ‘Debt/Equity Equation’ , I had mentioned that market has to soon take a decisive upward turn and had given the back-drop to it. Please go through the same once more .