Thought for the day
"Our Constitution was made only for a moral and religious
people. It is wholly inadequate to the government of any other. "
-
John Adams (American, 1735-1826)
Word for the day
Efface (V, trn)
To cause to disappear by rubbing out, striking out, etc.;
to erase; to render illegible or indiscernible.
(Source:
Dictionary.com)
Teaser for the day
I dare all champions of Hindu cause
to visit Vrindavan during rains!
The longest hour
This morning the financial market place seem more like a war
front to me; where the next one hour seems much more critical than the next day
and no one seems interested in talking or listening about next one month or
next one year. Survival is the key here not the longevity.
Writing a strategy about next one year under the circumstance
seems like a hazardous task to me. Nonetheless, moving with the heard, I would
like to foresee the events in the womb of time and bet my money on some of the
events which I feel are most likely to occur.
I am encouraged by the fact that despite all grave accusation
and great provocations, I maintained my NIL weight to commodities, underweight
to infrastructure & financial, and overweigh to consumers and exporters
stance throughout the year.
I am also satisfied by not getting carried away by the change in
government in India and insisting on first seeing the change on ground before
betting on my money on broader economic growth trade.
I have always maintained that historically, a large majority of
Indian businesses have grown on government patronage and/or resource arbitrage
opportunities and have been low on innovation, productivity and scale. The
politically advantageous socialistic façade of the government, especially
during 1950-1990 led to misallocation of resources, trade and capital controls,
demand suppression, and protectionism that promoted low productivity. The
conditions have changed in past 10-15years but not sufficiently to make a
majority of Indian businesses globally competitive.
The following trends, which are quite likely to strengthen in
next few years, would suggest that a large number of small, over protected,
less productive, uncompetitive, under-capitalized businesses should become
extinct in next decade or so.
In past two decades we have seen this happening with small steel
and cement plants, textile manufacturers, petrochemical plants, numerous public
sector undertakings, NBFCs, etc.
There is no reason why it should not happen to (a) small and
mid-sized engineering and construction companies which purely survive on administrative
patronage: (b) ITeS providers who are pure commodity plays solely focused on
wage arbitrage opportunities; (c) mid-sized commodity producers who cannot
scale up to compete with global corporations in a more open, price &
quality competitive and transparent market; (d) intermediaries who are not
adequately capitalized and technologically prepared to serve or compete with
large global businesses which are highly price sensitive, etc.
Over next few days, I will present my thoughts on various issues
concerning investors.
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