"What we see depends
mainly on what we look for."
—John Lubbock (British,
1834-1913)
Word for the day
Prink (v)
To fuss over one's dress,
especially before the mirror.
Malice towards none
Instead of urging his MPs to
engage more with society, PM has urged them to engage more with social media!
Are means becoming goals?
First random thought this morning
Last week Priyanka Chopra (PC) took a strong objection to some
views of the GoP's presumptive presidential nominee Donald Trump. Some friends
are debating if she did commit a mistake. The debate is twofold - (a) whether
artists should take strong partisan political positions; and (b) whether PC has
unwittingly hampered her budding international career.
Personally, I do not see any wrong in PC, or any artist for that
matter, taking a strong position for a cause, ideology, party or person - like
any other common person. But being a person who is closely followed and
idolized by many, they should be prepared and willing to face consequences.
They can't just get away, like I may!
Key risks to Indian markets
Indian markets face three key risks at this point in time, in my
view.
1. Water shortages
As I mentioned yesterday (see here),
the most visible risk is acute water shortages across central and southern
India. Almost all water intensive industries, like construction, chemical,
paper, textile are staring at the prospect of production cut.
Cement and steel producers are already witnessing demand
contraction in April-may. Large scale migration and erosion in purchasing power
due to lower productivity, employment disruption, higher spend on water -
consumption in affected areas is also suffering.
Lower milk yield due to fodder scarcity and higher sugar prices
(lower production) may also impact many FMCG companies, especially diary and
bakery products.
I guess poor 1QFY17 results of many of these companies will be a
better opportunity to enter in their stocks.
2. Failure of global reflation trade
In past three months of months global commodities have seen a
massive rally. Many commodities have witnessed 10-70% rise in prices from their
recent lows.
The market participants globally are debating the reason behind
such a rise in prices of industrial commodities, given that the growth continues
to be weak. The views are diverging from "beginning of new commodity
cycle" to "purely speculative" to "just a corrective rally
in deeper bear market".
Nonetheless, our market has seen a massive rally in metal stocks
on the back of this global reflation trade. Government protection in terms of
safeguard duties, minimum import prices, etc. has also helped to a great deal.
Some reports are suggesting that many Chinese traders may have
taken to commodities in a big ways in the wake of poor equity market prospects,
and this position is already hurting (see
here).
A failure of this trade is a key risk to Indian markets as it may
inflict huge losses to investors who have taken larger positions.
3. Precipitated burst in e-commerce bubble
There are all classic indicators of a bubble in the Indian
e-commerce space. The elimination has already started. The valuations are being
adjusted lower. But the bubble is still there.
There is not much exposure to this space, insofar as listed
equities are concerned. Nevertheless, it will have certainly have significant
impact on employment market, financial system, FDI flows and consumption
demand.
...to continue on Tuesday.
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