Wednesday, May 2, 2018

Four years of Modi rule

"A good way I know to find happiness, is to not bore a hole to fit the plug."
—Josh Billings (American, 1818-1885)
Word for the day
Machiavellian (adj)
Characterized by subtle or unscrupulous cunning, deception, expediency, or dishonesty.
Malice towards none
The Paan Shop idea of newly appointed Tripura Chief Ministers is revolutionary if we consider the direct and indirect employment generation potential of this vocation!
 
First random thought this morning
Pawan Chamling is now the longest serving CM of any state in India.
As CM of Sikkim for more than 23yrs, his performance has been commendable in most respects, especially improvement in social indicators.
Organic farming, cleanliness, education, public health, law & order, and even economic growth, the state ranks amongst the top performing states in the country.
Wonder, why we do not hear name for a bigger national role. He seems like the best PM candidate for the united opposition!!!

Four years of Modi rule

Last year, the results of some opinion polls for UP & Gujarat assembly elections, suggested that BJP might not be able win these states and Modi magic many be diminishing. The financial markets were totally disappointed at the very prospect of any fall in PM Modi's popularity. Even UP municipal elections later were discussed and analyzed with a great deal on interest and anticipation.
Later in the year, a close fight in Gujarat assembly elections also scared markets. It motivated many senior analysts, strategists and market commentators to opine that a loss for Modi in 2019 may adversely impact the India's economy that is beginning to recover from the twin disruptions of demonetization and GST implementation.
Surprisingly, market does not at all seem concerned about Karnataka elections. After every opinion poll that suggested that BJP may not do well in the state, the market has in fact risen higher!
What could this mean?
(a)   Has market stopped believing in opinion polls? Does it assume that BJP will win Karnataka, and opinion polls will once again prove to be wrong? or
(b)   Has market finally realized that the outcome of state assembly elections has little relevance for the economy and hence stock markets? or
(c)    Does market now believe that a loss for BJP in Karnataka would be good for good for the economy and hence stock markets? Does by extension this mean that market will celebrate a loss for BJP in 2019 general election? or
(d)   The market exuberance seen in April 2018 is misleading and market may correct in case Congress manages to retain power in the state of Karnataka.
As Pm Modi is completing four years in power, and the last year leading to general elections begins, it would be pertinent to make an objective analysis of the performance of incumbent government led by him.
An objective analysis is relevant from an investor's viewpoint, because that shall allow a considered positioning in the wake of 2019 general elections.
Over next few days, I shall be presenting my analysis of the developments in past 4years that have or could have material impact on my investments.
My readers are fully aware of my strong views about the "no correlation" between politics and economics in India. I would therefore not be discussing the developments from the prism of partisan politics.
I am more interested in analyzing the economy from the viewpoint of (a) sustainability; (b) break in linearity, if any; and (c) probability of discontinuity in case of political transition, i.e., BJP not being able to form government in 2019 with comfortable majority.

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