Tracking future course of Geopolitical Events In the Indian Sub-continent using technical analysis

Tracking future course of Geopolitical Events In the Indian Sub-continent using technical analysis

 

 

Synopsis

 

After comparing Kargil attack in 1999 and terror attack of 26/11 and analyzing subsequent event we foresee:

1. Use of fight against terror as election plank by ruling party in coming general elections in May and its subsequent success in the same.
2. Ousting of civilian government in Pakistan in a Military coup by June 2009

 

Pastime

 

After having worshiped on the feet of Goddess of Fundamental Analysis for the last 3 years, I have finally decided to try my hands on technical analysis. Not that, I have lost faith in fundamental analysis or discovered some hidden virtue in technical one. It is just that both of them failed terribly in what is now called “the worst year since The Great Depression” and hence both deserve to be tested.

 

But I could not still gather the strength to try this method for investment purpose. This is not entirely because of my personal preference on palmistry, stargazing, numerology etc for fortune telling over the tools used by my chartist brethrens. But there are already too many analysis/predictions/forecasts etc on share price movements. In fact, some say that few read these reports, leave using, other than those preparing it. If the analyst is fortunate enough his report might best serve as reference to some other analyst to prepare a valuable report, which unfortunately will find similar readership (next to none). And after Satyam fiasco, it is doubted whether Indian equities deserve any valuation. After all, what results will we get by estimating the future earnings based on the already estimated (manipulated) numbers? This is additionally important as such news comes from the altar of corporate governance and ethics. What would the condition be of the oldies is known only to the ALMIGHTY

 

Rather I thought it would be more rewarding to use our analysis on the favorite pass time that this nation has been indulging in since last two months. Maybe after a long-time, general affairs, euphemism for Politics, has found some common interest. The TRP’s are more for what Zardari or Pranab Mukerjees’s statements than on our beloved cricketers and filmstars.  It is over here I thought I might find some interested in reading.

 

Analysis:

 

Well, back to the main topic. This report will try to perform a technical analysis of geopolitical conditions in India and Pakistan on the background of terrorist attack in Mumbai. As per my understanding of the technical analysis one tries to predict the course of future event based on the movement of past events.

 

 

Now, what comes in mind after seeing all these events for last two months I find great deal of similarity to what happened in Kargil, 1999. Some of them are as follows:

1. In India, a fragile government headed by Atal Behari Vajpayee was reeling under pressure from allies for survival. Now, we have an equally fragile coalition (more so after withdrawal of Left Support) headed by Manmohan Singh. Both these governments comprised of inherently opposing elements and had wafer thin majorities (Vajpayee govt. fell by just one vote) in Parliament. Economic conditions were not good characterized by raging inflation (recall Onion prices ~50 per kg), low economic growth and our own little crash in the equities market. The major achievement of both the governments was linked to nuclear energy. While Vajpayee allowed for testing of nuclear weapons, Singh pioneered Indo-US nuclear deal.
2. In Pakistan, the then Premier Nawaz Sharif was almost establishing dictatorship by amending constitution, installing and dismissing military chiefs at his will undermining the authority of President etc. Now, President Zardari is trying to consolidate power by undermining authority of PM, delaying reinstatement of Supreme Court judges. Economic conditions were remarkably similar to present day as food shortage and default on international loans dominated the scene. As now, military was worried on losing its grip on power due to strengthening of civilian rule.
3. Friendship between the 2 nations was grooming after the historic Lahore bus trip by PM Vajpayee. Prior to 26/11, friendship between India and Pakistan was improving after civilian government came to power in Pakistan. There were hopes that the new government will assist India is fighting terrorism as their leader Benazir Bhutto herself was killed in terror attack (as indicated by Zardari’s statement that those involved in violence in Kashmir are not freedom fighters but terrorists).
4. As now, Indian ruling party was trying to find ways to avoid public resentment in impeding general elections. Similarly, Pakistani army was trying to find ways to take control of government. Both tried the time-tested method of arousing patriotic sentiments of the public, which unfortunately means increasing hatred towards the neighboring country. Pakistani army orchestrated the terrorist’s attack on Kargil in April 1999 while Vajpayee was trying to save his government in Delhi from an impending no confidence vote. Maybe, a big maybe that is, it was more important to save the government tan secure the borders. Hence larger ears were busy in hearing of petty conditions of politicians in lieu of support than too intelligence news from the border. Similarly, we can guess, what would have been the importance of UPA government in July and following months with a no confidence motion concerns on anti incumbency factor loss of allies etc. Security intelligence could have been easily sidetracked. Why else was the Home Minister¹ not replaced in spite of several attacks in various parts of the country, especially after the 3-time wardrobe change in Delhi while bombs were exploding in the city.
5. In 1999, ruling coalition in India campaigned on Patriotic fervors portraying themselves as protectors of border and won the elections with increased majority. Fearing growing power of Army Chief Musharaf, PM Sharif sacked him. However, in dramatic turn of events Sharif was ousted in military coup and Musharaf became the military dictator of Pakistan

 

Inference:

 

Based on these facts/inferences I venture to forecast the future course of events:

Ruling coalition in India will use fight against terror as an election issue (as visible in some ads highlighting how the government did not succumb to terrorists, it did not meet their demands of letting them go free in lieu of hostages, how their leaders have been killed in prior terror attacks) and might be able to return to power in May elections.

Army in Pakistan will project the civilian government as weak, corrupt (there are can be enough cases against Zardari) and sacrificing national interest under Indian and International pressure. Eventually, the government will be ousted in a coup with promise of free and fair elections as soon as things stabilize.

 

 

 

 

 

Cautionary Note:  History repeats itself, with its own shocks and ventures.

There are issues such as renewed American interest in the region, better access to information medium (internet and TV), fragmentation of political parties in India, lack of political charisma that Vajpayee had etc. But all these fall under the realm of fundamental analysis hence can be sidelined.

 

 

Footnote:

¹  I have great respect for Shivraj’s Patil ability and integrity that he had exhibited in various executive and legislative positions especially as Speaker in the past. It is just that the ability and work profile didn’t match. He would have been a great success in some other productive job such as HRD.