"To refrain from imitation is
the best revenge."
—Marcus Aurelius (Roman, 121-180)
Word for the day
Amphigory (n)
A meaningless or nonsensical
piece of writing, especially one intended as a parody.
(Source: Dictionary.com)
Malice towards
none
Nawaz Sharif says UN must intervene to protect Kashmiri people from
atrocities of Indian government.
Azam Khan says UN must intervene to protect the Indian Muslims from the
atrocities of Indian government.
What do you say?
An
Investor's Diary
With each passing day, the expectations of the market participants
from legislative reforms are diminishing. The acrimonious Bihar election is
obliterating any chance of any political rapprochement in near term. It is well
recognized that even if NDA wins Bihar elections, the Rajya Sabha arithmetic
will not be in favor of the government for another one year at the least. The
GST law and other legislative reforms are therefore much less talked about in
the market place.
Realizing its political limitations, the government is now
focusing on administrative reforms, and rightly so. This change in focus is
generating material investment opportunities, and therefore invoking keen
interest from market participants.
The proposed restructuring of state power utilities is one such
measure that was long pending. From whatever details are publically available,
it appears that this measure could result material improvement in both energy
and power sector. Proposed revival of jinxed Dabhol power plant and LNG
terminal should also be looked as extension of this exercise.
Increased emphasis on renewable sources of energy and commitment
to cut emission norms could truly prove to be game changer.
Material changes in road sector, including creating environment
for exit of inefficient, inadequately capitalized and/or highly indebted
developers, have accelerated the revival of stalled projects and paved the way
for commencement of new projects.
Reviving the proposals to privatize loss making PSUs and Sagarmala
projects is another indication of changed focus of the government.
The government has shown unflinching commitment to fiscal
discipline. It has shown remarkable restraint in deciding not to pass the
entire crude price benefit to the consumer and augment resources needed for
roadways and railways through higher duties. This has perhaps encouraged, an
otherwise cautious, Governor Rajan to frontload rate cut.
It is well understood that these measures will neither help
private consumption nor encourage private sector investment in the near term.
Nonetheless, these measures will create a strong foundation for
cyclical revival of the economy. Revival of stalled projects, restructuring of
state power utilities and empowerment of banks to takeover managements of
defaulting corporates will provide much needed respite to public sector lenders
and help them raise capital and improve their capital adequacy. Newly created
payment and small banks will become efficient channels for bringing the micro
savings to the mainstream as compared to the post office and Small Savings
Organization (SSO).
In the meanwhile, spate of poor data from US and Europe has
queered the pitch for the US Federal Reserve. The growth is becoming scarce and
demand is falling. We are definitely in a low inflation (or no inflation) low
return environment. India may not be an exception in the mid term.
In next few days, I shall review the likely changes in investment
landscape and the evaluate whether any changes are required changes in the
strategy.
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