"The past, like the future, is
indefinite and exists only as a spectrum of possibilities."
—Stephen Hawking (British,
1942-2018)
Word for the day
Dornick (n)
A stout linen cloth,
especially one of a damask linen.
Malice towards none
Since when in India
admitting mistakes and tendering unconditional apologies become a subject of
ridicule and sign of weakness?
First random thought this morning
One most befuddling thing about our administration is that it
seeks to pass every withdrawal or deletion of a law, rule, regulation or procedure
as a reform. For example, the other day Civil Aviation ministry official
claimed that doing away with requirement to tag the hand baggage is a
"reform" in the direction of ease of doing things.
They fail to understand that withdrawal or deletion of a law,
rule, regulation or procedure would be reform only if the government admits
that introducing it in the first place was totally avoidable and perhaps a
mistake. Otherwise, the change is just an administrative correction
necessitated (or made feasible) by the changed circumstances, not a
"reform".
Political uncertainty is something that has perennially bothered
Indian equity markets. In past few years the scope of this totally avoidable
trouble to the market has in fact widened significantly.
Earlier, the market was used to generally bother only about
general elections.
However, in recent times, the market has shown jitters during
almost all assembly elections, local body elections, and even bypolls to 2-3
Lok Sabha constituencies that have no immediate bearing on the Lok Sabha
arithmetic.
To make the matter even more ridiculous, many market participants
were seen highlighting the outcome of the student union elections of some
universities in their discussions and presentations.
I have stated this many times earlier and reiterated last week (see
here) that there is little evidence to show that politics in India had any
lasting impact on stocks markets. Nonetheless, elections have certainly caused
rise in volatility.
I therefore believe that a heavy election calendar in 15months
must be affecting the investors' sentiment currently.
In next 15 months, we have elections to 10 state assemblies,
together accounting for 160 (30%) Lok Sabha seats. Out of these currently 5
states are under BJP/NDA rule (accounting for total 68 Lok Sabha seats).
The market shall be keenly watching the 5 state assembly election
that may be completed before the next Lok Sabha election. The popular
perception seems that a setback for the ruling BJP in any one of the larger
states, e.g., Karnataka, Rajasthan, MP and Chhattisgarh will open up the
contest in April-May 2019 general elections.
As I said, I do not believe that outcome of these elections will have any
material impact on real economic conditions of the country. Nonetheless, the
market may witness heightened volatility during the process.
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