Thought for the day
"Sometimes
a cigar is just a cigar."
-
Sigmund Freud (Austrian, 1856-1939)
Word for the day
Abscond (v)
To depart secretly;
(Source: Dictionary.com)
Teaser for the day
If AAP truly believes in the democratic system, democratic
values, Swaraj, and morality & ethics in public life - would it not be in
order for them to assign the role of opposition to 20 of its MLAs (may be by
annual rotation) and direct them to be a strong and forceful opposition!
Pendulum to stop in middle after a reverse swing
Contrary to my expectations, I received overwhelming approval of
the investing community for the view
that investors need to provide for contingency arising out of PM Modi running
out of luck before May 2019.
Most interestingly, the worries are emanating less from
the apprehension of likely decline in BJP's fortunes in next few years or the
PM running out of luck and more from the prospects of complete
decimation of Congress party and hence emergence of a disparate alternative
regime like National Front of 1989 or United Front of 1996.
A small but highly informed minority also went to the extent of
dreading a situation where some radical group gets overwhelming majority at
national level and sets the clock back on economic reforms.
I guess the overhang of Delhi elections and political
developments in Greece & France must be playing some role in sub-conscious.
Anyways, I do not wish to go that far a distance. I believe
that—
(a) The incumbent
government will perform better in the remaining four year term. Though it may
not beget any radical changes in the present institutional framework of the
country insofar as the socio-economic policy framework is concerned.
The market would
have reasons to be pleased with the performance of the government once the
overhang of over-expectations is neutralized in next 6months.
(b) The Congress
Party might have already bottomed in terms of its performance. It shall be able
to stage a strong comeback on national scene as well as state levels,
especially in central and western India in next 10years.
Accordingly, I would reiterate my view and strategy as
follows:
1. In next 24
months, most of the weakness in Indian financial markets may be caused by the
global factors, known, unknown and unforeseen. Regardless of growth stagnating
in 5-6% band (old series) and rates hovering at current levels, we may not see
only marginal de-rating of Indian equities from the current levels.
2. The domestic
macro environment shall remain stable, with no major improvement or
deterioration. The earnings growth therefore may not see any major jump.
3. The expected
return on equities for FY16 should be lower at 12%, assuming lower interest
rates and lower risk premium for equities.
4. Any major
correction in any Indian equity prices, due to known global events like US Fed
rate hike or defaults in commodities world, would be a good opportunity to
leverage in Indian equities.
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