"To spare someone
shame, is the most humane thing."
—Friedrich Nietzsche
(German, 1844-1900)
Word for the day
Daymare (n)
A distressing experience,
similar to a bad dream, occurring while one is awake.
Malice towards none
A survey by a large life
insurance company, suggests that as many as 83% of the large city residents in
India may be uncertain about their life!
First random thought this morning
Have you checked whether your
kid can count till 100 in Hindi? Well I did, and I was astonished. None of my two
children could move past 58!
While it is fashionable to feel
sorry about the Mother Sanskrit, lying on deathbed, not many tears are shed for
the daughter Hindi. Still not terminally ill, the mother tongue of at least
over 300million Indians, is stagnant, feeble and helpless than ever.
Incidentally, the cousin Urdu seems to be doing no better.
Strategy review
Mark Twain once famously said " There are lies, damned lies
and statistics". Evan Fraser later clarified "The science of
producing unreliable facts from reliable figures".
There are numerous data points being presented about the progress
of current monsoon season. The financial markets are glued to all this
statistics, since post twin setbacks of Demonetization and GST, a good monsoon
is the straw of hope most of their forecast may be hanging to.
A recent visit to the states of UP and MP, however suggest that
relying on official monsoon statistics might be misleading, at least for now.
As the table on next page shows, a large part of India, which is
more relevant for summer Kharif crop, e.g., UP, Punjab, Haryana, Maharashtra,
MP, Karnataka, Assam, Chhattisgarh, etc., has received rains less than the long
term average. A few regions have received excess rainfall, most notably,
Rajasthan and Tamil Nadu.
Besides, a large part of Assam, North Bihar and Eastern UP are
reeling under severe floods, mostly due to excessive inflows in rivers from
Nepal and China.
It would therefore be reasonable to expect flat to little lower
Kharif crop, despite rise in sown area. For example, the farmers in UP
suggested that sugarcane yield in coming season could be little lower. Rice
yield in Punjab, UP and Assam is also reportedly affected.
I also observed that the impact of farm loan waiver, announced in
some states, is already withering fast. Many rural families believe that their
situation may not be much better even if they receive the benefit of loan
waiver (despite all claims, many families seems not to have received the loan
waiver certificates as yet).
The situation is worsened by the obstruction in construction work
due to foods (or shortage of water), which means lower employment opportunity
for construction labor.
In my view therefore, pinning hopes of earnings recovery in 2QFY18
mostly on demand recovery due to normal monsoon (statistically we might
conclude the season with a normal monsoon!) may not be appropriate.
Moreover, I also have some problems with the premise that 4QFY17
and 1QFY18 earnings were mostly impacted by GST related adjustments and things
should improve materially from 2QFY18 onwards. I think it may take another 2-3
quarters before GST related disruptions are fully normalized.
A major positive for the Indian financial markets could be a
sustained fall in real interest rates over next few quarters. Recovery in
commodity prices and progress of bankruptcy proceedings could also throw some
interesting investment opportunities.
I would like to cut a bit on my middle class and rural consumption themes and add some selective stressed assets in my portfolio over next six months. Retail banks is something I am confused about.
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