"Women thrive on novelty and are easy meat for the commerce of
fashion. Men prefer old pipes and torn jackets.'
‑ Anthony Burgess (English,
1917-1993)
Word
for the day
Shrive (v)
To grant absolution to (a penitent).
To impose penance on (a sinner).
Malice
towards none
The award for Best Global
Jumlebaaz goes to— PM Narendra Modi!
ohhh... sorry...sorry
it goes to- President Donald Trump!
First random
thought this morning
From 10k feet above, the entire unrest in DU appears to be part of
a desperate strategy of CPI (M) to regain some relevance in Indian politics.
Unfortunately for them, they could only motivate some anti BJP
voices. No support for communists agenda.
The meddling by Congress in the matter shall only further erode
the already diminished support base of the party
AAP could be an unintended beneficiary here.
Is it TINA alone?
A deeper analysis of the current behavior of Indian
stock market would need to examine at least two factors:
(a) How much is the role of TINA (There Is No Alternative) in the rise
in inflows into the Indian equities?
In past three years we have seen
marked acceleration in the domestic flows into the Indian equities. More
importantly, the rise in flows has been accompanied by the acceleration in the
institutionalization of the investment process.
A much higher proportion of flows
is now coming through regulated institutional investors like mutual funds,
portfolio managers, pension schemes, etc. Thus is quite unlike the past
instances when the investors preferred to invest themselves.
Even more importantly, a
significant part of the fresh flow appear to be committed for longer term.
Steady rise in SIP (Systematic Investment Plan) and pension fund contributions
indicates towards this trend.
Given the longer term nature of
inflows, the investment managers are in a better position to take investment
calls on relatively smaller and midsized companies where the business cycle are
more volatile & comparatively untested, but growth potential is
significantly higher as compared to the larger stable businesses. The market
breadth therefore is deeper and broader this time.
It is worth examining whether this
higher allocation to the equity and related instruments, marks a structural
change in the behavior of Indian household investors, or it is just due to TINA
factor, as real estate is in bad shape, informal credit market is in shambles,
deposit rates have fallen, tax arbitrage for equity has widened, and gold has
become very volatile and unpredictable.
Insofar as the global investors
are concerned, a rally in developed markets did prompt a move towards these
markets from emerging markets. However, given the remarkable stability of
Indian rupee , resilient growth, improving macro, and relatively well regulated
market, they have remained overweight on India.
It is worth examining, how would
they react if RBI does let INR slip to 70-71/$ level, as has been suggested by
many experts.
(b) Indian equities are not cheap by any standard. Relative to their
developed market peers these may appear fairly valued, but not 'cheap'. The
case for re-rating of Indian equities needs to be examined carefully.
Is the macro stability enough
reason for re-rating; or we need to see improvement in earnings' outlook also?
In my view, if TINA is amongst the
key factors driving equity prices, a great deal of caution is needed. I do not
see any case for sustainable re-rating of Indian equities as yet.
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