"The mountains are
calling and I must go."
—John Muir (American,
1838-1914)
Word for the day
Pecuniary (Adj)
Of or relating to money,
e.g., pecuniary difficulties.
Malice towards none
Does anyone see any
similarity between KG-D6 and Reliance JIO?
First random thought this morning
These days, there is no dearth of analysts and economists who have
sighted flocks of Black Swans flying over Chinese skies.
I always thought, if you could see them - they are not black!
For record, did anyone saw Enron or Lehman collapsing?
I am holding on to my cheese tightly!
As I stated in past couple of posts (see here
and here),
I am not at all convinced about the so called "Monsoon Trade" in
Indian equities. I believe that the markets have overreacted insofar as the
price action in many agri inputs, farm equipments, rural financiers, and
consumer stocks are concerned. I find many of these stocks way beyond the fair
value line. I expect it to be a pain trade. The returns from the current level
may be normal and back-ended.
At this point, if someone wants to narrate the fable of "sour
grapes" to me, or present me Dr Spencer Johnson's "Who moved my
Cheese?" or anything similar, they are most welcome.
Now moving to my take on investment strategy under the present
circumstances.
I have been arguing for long that consumption will stay the
mainstay of my India equity strategy.
I have also argued that consumption of service though growing much
faster and deeper, may offer very few actionable investment ideas. For example,
consider the following.
·
We are already witnessing oversupply conditions
in power and energy. The situation will only worsen as more conventional and
solar power comes on grid, improved rail network and port connectivity augments
coal supply, LNG supplies increase materially (both domestic and imported),
monsoon improved hydro power generation, and LED and BEE drive optimizes peak
power demand.
·
Logistics stocks have already run up in
anticipation of surge in E-commerce volumes and GST and trade at astronomical
valuations.
·
Telecom stock are staring at a fresh round of
capex (a massive one) and disruptive tariff.
·
Mining though mostly past the legal troubles, is
facing huge global oversupply hang.
·
Hotels, trade, e-commerce, construction are
suffering from higher taxation, low demand growth, rising wages and stretched
balance sheets.
Under the circumstances, I would stick to my stated (see here) strategy of
focusing on upper middle class and aspirational consumption. I would focus on
retailing, entertainment, service oriented banking, transportation & logistics,
and healthcare sectors.
On product side, I would like to focus on aspirational products
like lifestyle drugs, beer, premium liquor, household upgrade (lighting, tiles,
plywood), luxury housing, premium automobile, packaged food (non-basic), etc.
Technology will also remain a core theme in the portfolio.
However, focus will be on innovators, designers, and engineering services. I
would mostly avoid body shops.
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