"Take care to get what
you like or you will be forced to like what you get."
—John Milton (English,
1608-1674)
Word for the day
Daily-Breader (n)
A commuter
Malice towards none
Besides UP CM, PM and BJP
President, can you name two more BJP leaders who campaigned in Gujarat and
Himachal Pradesh?
For sure, there must be
many. The question is why aren't they visible to us!
First random thought this morning
Suddenly there is a rush in stock market to buy stocks of the company
who may benefit from rise in rural income. People are buying FMCG producers,
farm equipment and farm input manufacturers, automobile OEMs, as if from
tomorrow morning Modi government will start depositing the promised Rs15lacs in
the savings accounts of everyone.
If we accept that our markets were fairly valued on 18th December,
than every sudden 20% rise in price of a stock must be matched by 20% increment
in the earnings forecast, over and above the previous forecast!
Oh what fun it is to ride an one horse open sleigh!
2017 in perspective
The 2017th year of the Christ, was quite an eventful year for the
global economy and financial markets especially. For the first time since
global financial crisis, the financial markets appeared excited.
A large number of global indices scaled new highs. Industrial
commodities staged a smart recovery. Europe did not present any challenge to
the global economy. No significant Brexit driven disruption were seen. Politically
French and German elections did not throw any surprise. China ushered into a
new "Xi Era". The new kid on the block, Bitcoin, surprised almost
everyone with the ferocity of its ascent. OPEC and Russia solidarity survived
beyond most expectations, leading to stable energy markets.
Central Bankers sounded more confident about recovery and appeared
ready to embark on the path to normalize the monetary policy exceptions made to
ward off the global financial crisis. Most notably, US Fed hiked rates thrice
and guided for contraction of its balance sheet.
Despite all skepticism, Trump survived all challenges, and is all
set to deliver on his major poll promise of tax reforms. He could also make
significant progress on immigration reforms.
Middle East mostly remained peaceful. All hotspots like Iran,
Gaza, Iraq, Turkey, Syria, Yemen, et. al. remained contained and did not
present any threat of escalation.
North Korea was perhaps the only irritant that bothered global
peace a few times during the year. But that threat perception also seems to
have dissipated in recent weeks. The markets are mostly ignoring any fresh
provocation from the maverick Kim Jong Un.
For records:
(a) Benchmark Nifty gained
~28% during the year. Its best performance since 2014. The return in broader
markets did much better. Small cap ~50% and Midcap ~42% outperformed the
benchmark significantly. The top small and midcap fund returned 75% for the
year, whereas the top large cap fund returned 45%. The managed assets industry
had one of the best year in more than a decade.
(b) Global commodities are
ending the year marginally lower on yoy basis. However, most commodities
witnessed sharp rise in 2HCY17, after falling to multiyear lows in 1HCY17.
Crude and Copper were two notable gainers.
(c) Benchmark bond yields
rose ~10% (yoy), with 10yr Gsec yields rising from 6.6% to 7.2%. Bond and
income fund returns were therefore averaged less than 5-8% for the year.
Deposit rates witnessed marginal rise. Gold fund returned about 2.5% during the
year.
(d) The home price bottomed
and showed a moderate growth as new launches fell sharply.
Politically, BJP led by PM Modi strengthened its position
significantly. BJP formed government in the largest state UP with overwhelming
majority. It also joined the government in the second most populous state
Bihar, as JDU parted ways with alliance partners RJD & Congress and joined
NDA. It won Gujarat assembly for the record sixth time, retained Goa, regained
Himachal Pradesh by defeating incumbent Congress and managed to form
governments in Manipur and Arunachal Pradesh, significantly consolidating its
position in the strategically important North Eastern region.
As of this morning, BJP rules 14 States on its own and another 5
states with its NDA allies. The principal national opposition Congress Party is
now confined to just four states (out of which three would go to election in
2018) and one union territory.
With this background and perspective, I shall share my assessment, outlook and strategy for 2018 in coming days.
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