"Acting is very
fascinating, but being an actress is not, because you become so concentrated on
yourself."
—Beatrice Wood (American,
1893-1998)
Word for the day
Minerva (n)
A woman of great wisdom.
Malice towards none
Bhasmasur is not an entirely
a mythical character.
First random thought this morning
Globally, India is widely recognized as the diabetes capital of
world. Indian government has also acknowledged this fact on a number of
occasions.
However this acknowledgement has not resulted in acceptance of
this fact. The designing and construction of most civic infrastructure and
amenities therefore is incongruent to the fact that a large number of diabetic
people will regularly use these amenities. For example, Delhi Metro has
provided space for public toilets only on a few interchange stations; NHAI does
not construct and public toilets on the highways nor does it require private
road operators to do so!
What is bothering Indian markets - 3
As per a recent report published by RBI, currently the average capacity
utilization in Indian industries is close to 72%. This has been the case for few
years. The IIP growth during this period has been at multi year low.
However, the inflation has jumped above the RBI
target rate of 4%.
This is when the economic growth has just started
to pick up and is still seen much below the potential, leaving a large output
gap. Private consumption is showing no sign of revival, employment level
remains poor, and most of the investment demand is driven by public investment.
Despite benign growth, high output gap, and poor
consumption growth, the rates have started to rise. Most banks have raised both
the deposit and lending rates in past few weeks. The benchmark government bonds
yields hace risen by more than 110bps in past six months.
The arguments in favor of higher bond yields have been many but
mostly unsubstantiated, e.g., fiscal concerns, rise in global yields etc.
This situation is quite unusual. There is no instance in recent
history where rate cycle would have reversed in this early stage of growth
cycle.
So far we have not seen any effort from the government or RBI that
would inspire confidence. To the contrary, the still rising stress in bank
balance sheets, tighter domestic liquidity (though RBI announced early this
week, pumping of Rs1trn in market to ease liquidity), tightening global
liquidity threaten that rates may stay elevated in near term at least.
Higher cost of funds may not only impact corporate profitability,
but also impede the investment plans.
Since, RBI is totally focused on inflation targeting, banks have
to deal with the new set of problems, and government may get too busy with
election schedule - the growth may not be a top priority for now.
This must be bothering equity investors
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