Wednesday, June 27, 2018

Little hope for a religious renaissance

Thought for the day
"Bureaucracy, the rule of no one, has become the modern form of despotism."
—Mary McCarthy (American, 1912-1989)
Word for the day
Scupper (n)
Any opening in the side of a building, as in a parapet, for draining off rain water.
Malice towards none
By accepting his family, BJP and RSS have pardoned late Sanjay Gandhi, their chief persecutor during emergency days!
Or they haven't?
First random thought this morning
The biggest socio-economic priorities in India at this point in time should be:
(a)   Providing a tap carrying potable water to every household.
(b)   Taking school education out of government control and leaving it to students and teachers.
(c)    Government getting totally out of industrial and banking businesses and focusing all energies and resources on agriculture, just as it did for industry and banking in 1950s and 1960s
(d)   Making ROI of public offices (elected or appointed) negative.

Little hope for a religious renaissance

Continuing from yesterday.
Another headline that that I found disconcerting was UP Chief Minister ridiculing the Congress President for his much publicized temple run (see here).
In the related news item CM Yogi Adityanath said, "The Congress president remembers temples only during the elections. Four generations of Rahul's family have never worn a 'janeu' (sacred thread worn by Hindus), but at the time of elections, he shows his janeu." "The four generations of Rahul Gandhi have never moved a step towards a temple. One should visit a temple with a feeling of devotion and not for politics or to show off," the chief minister added. It's actually been a common theme in most BJP speeches since Gujarat elections.
My anecdotal experience gained from numerous travels across breadth and width of the country suggests that the traditional Indian religions have been degenerating since past many decades. It is absolutely critical since religion still forms the very core of the Indian socio-economic structure.
Superstitions, fears, desires, frivolous rituals and ostentatious celebrations now dominate the sense of religiousness, rather than selfless prayers for general social well being, efforts to immerse into the Nature, creating a path towards attainment of spiritual goals, & self-elevation as a human being.
Our politicians, particularly the right wing parties, have done almost nothing to stem the rot that is plaguing our religions and cultural traditions. Instead, they have encouraged the distortions to further their vested interests. This could be one of the primary reasons for lot of malice prevalent (and growing) in Indian society.
I am afraid, religion is forcing its way deep into Indian politics; empowering the politically ambitious priests and preachers. The shallowness of religious belief of politicians has become the benchmark for the society. For example, could CM Yogi explain why going to temple during the time of need is bad. Isn't it what millions of common Indian do as matter of routine? And why politicians' (including PM and BJP President) visit to temples need to be telecast live on TV?
In my experience, the unprecedented rush to temples, to a large extent, highlights the rising economic distress in the society and not any strengthening of faith in traditions and culture. It should therefore be a matter of deep concern for the State.
In the current socio-political milieu, there is little hope for a religious renaissance, that would take us back to our glorious past where temples and mutts motivated youth to learn, seek and elevate themselves. Let's admit many of us go to temple to find an ATM, where we could withdraw money by presenting a unsecured promissory note!
(Note: Temple herein means a place of worship, regardless of religion)
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Tuesday, June 26, 2018

It's definitely not development

"If someone tells you he is going to make a 'realistic decision', you immediately understand that he has resolved to do something bad.
—Mary McCarthy (American, 1912-1989)
Word for the day
Edentate (adj)
Toothless
Malice towards none
Are all armed forces' officers absolutely beyond any doubt?
 
First random thought this morning
Sushma Swaraj and Venkaiah Naidu have emerged as favorite BJP leaders of many opposition parties in recent times. Even Congress leaders have expressed their liking for both of them.
This could be a strategy to create friction within BJP top ranks and make Modi-Shah little insecure and incite them to make some mistakes.
The possibility is that opposition parties are preparing for a Plan B, if BJP gets ~180-200 seats in 2019 and needs their help to form a government.
 

It's definitely not development

Three headlines that appeared in media in past 3days are particularly disconcerting. These news items aptly highlights some of the malice that have percolated deep down our socio-political consciousness'.
The related news claims that this year more than 2lac people may visit the holy Amarnath shrine in Kashmir during the month of Sharavan (July-August). Another 2million are likely to undertake Char Dham Yatra in Gharwal hills of Uttrakhand during five month period between May-November. More than 70% of these 2mn visitors will be visiting the holy shrines of Badrinath, Kedarnath, Gangotri and Yamunotri in 2months, with most visiting Badrinath and Kedarnath only.
As someone who had been visiting these holy shrines since childhood, I know for sure that these places are in no position to handle so many people visiting in a short span of one month for Amarnath and 2months for Char Dham. The ecology of Haridwar (Base camp for Char Dham Yatra) Uttarkashi (Gangotri and Yamunotri) and Chamoli (Badrinath and Kedarnath) districts has been damaged severely in past one decade.
The politicians have blinded the local populace with the lure of higher income and employment opportunity from rising pilgrim tourism. Unmindful construction and unpardonable exploitation of natural resources is not only endangering the ecology of the region, it is also jeopardizing the sustainability of all future generation. For, this region is the source of water to more than 250million Indians.
The government, and especially PM himself, ought to be deeply concerned over the number of visitor to holy shrines. He must immediately appoint an empowered commission to regulate the flow of people and vehicles to the region, rather than boasting about the crowds and traffic jams in the hills.
I have the following suggestions to offer:
1.    Completely ban private vehicles in 100km radius of these sacred temples.
2.    Allow only disabled and senior citizens to travel by public buses to the temples.
3.    Develop the traditional pedestrian route to the temples. Encourage youth to trek upto the temples. Provide tented accommodation with bio-toilets along the way.
4.    Ration the number of pilgrims visiting these temples, and make it compulsory for all pilgrims to plant one tree each and pay for its maintenance for one year.
5.    Ban plastic totally in the hills.
...to continue
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Friday, June 22, 2018

Mandate 2019 - 4

"I had a project for my life which involved 10 years of wandering, then some years of medical studies and, if any time was left, the great adventure of physics."
— Che Guevara (Argentinian, 1928-1967)
Word for the day
Summerize (v)
To protect in hot weather for future use.
Malice towards none
Do we know the proportion of things PM is seen doing, or claiming to have done, in front of cameras, to the all things he does or has done in past four years?
#RTI
 
First random thought this morning
Diggi Raja has announced loudly that he is back from his Narmada Yatra, and would not like to be ignored by the party or media.
Surprisingly six month long rendezvous with Mother Narmada has not changed him a bit. He still looks and talks the same.
It is a matter of investigation whether Mother Narmada has totally lost her powers to influence people who travel her path, or Diggi Raja is such a strong personality that even gods cannot influence him!


Mandate 2019 - 4

The narrative of 2019 general elections is quite similar to 1977, when most of the opposition parties in states north of Vindhyachal united to defeat the dominant Indira Gandhi. Parties in Southern India and Communists however stayed away from the united front called Janta Party.
Janta Party was formed just 2 months ahead of elections in March 1977 and it, along with its allies Akali Dal and Congress for Democracy (Jagjivan Ram), won 345/543 seats securing over 51% of popular votes. The Janta party however collapsed in less than 3yrs, due to multiple inherent contradictions and uninhibited ambitions and selfish agenda of its leaders.
An encore of 1977 experience was attempted in 1989 through formation of a National Front of regional parties under the leadership of Charismatic N. T. Rama Rao. Congress rebel V. P. Singh was the convener of the front, and also had parties from South as its constituents. A minority government was formed by V. P. Singh with outside support from BJP. The government and the Front however did last no longer than Janta Party. The infamous Mandal vs. Mandir clash brought the minority government down in less than two years.
The experiment was again tried in 1996 with formation of United Front of 13 regional parties and met the same fate as the previous two attempts. A minority government was formed with outside support from Congress Party, which met the same fate as Janta Party and National Front governments. The government and the Front collapsed within 2yrs.
There is an attempt to retry the experiment again in the name of Maha Gathbandhan (Grand Alliance). Many regional parties have shown interest in formation of a grand all India alliance to defeat BJP led by PM Modi.
There is little evidence to suggest that the outcome of the experiment could be any different this time, unless the pre poll alliance is led by a national party, i.e, Indian National Congress, like in 2009.
This looks less likely unless Congress accepts that its candidate may not be the Prime Minister, even if the alliance wins a majority in the election. The indications so far suggest that INC may not be keen on joining any government where its candidate in not PM. The situation might change after results of the assembly election in the states of Rajasthan, Madhya Pradesh and Chhattisgarh are announced later this year. as in all these states Congress has much at stake. A loss here would weaken it further and make it amenable to accept pre-conditions of alliance partners. On the other hand a victory will embolden the party and instigate it to set its terms for joining any alliance.
Secondly, like the three previous episodes this grand alliance shall also remain infected by vested interests, parochial agenda and uninhibited ambitions of various regional satraps.
I shall embark on a nationwide journey in late July-Early August to assess the mood of the nation, and share my thoughts with readers.
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Thursday, June 21, 2018

Mandate 2019 - 3

"Passion is needed for any great work, and for the revolution, passion and audacity are required in big doses."
— Che Guevara (Argentinian, 1928-1967)
Word for the day
Thigmotropism (n)
Oriented growth of an organism in response to mechanical contact, as a plant tendril coiling around a string support.
Malice towards none
US has reportedly withdrawn from UNHRC.
Should India follow, given UNHRC biased role in Kashmir?
And why not close the door on Amnesty International also?
 
First random thought this morning
In recent past multiple agencies have warned about the looming water crisis in the national capital city of Delhi. NITI Ayog is the latest to join the club.
Anecdotal evidence suggests that millions of Delhi residents are facing serious water crisis. Inadequate and contaminated water are common complaints. Many areas go without regular water supply for days. People rely on tankers for minimum water supply. Quarrels and violence over water are "normal".
The revolutionary Delhi CM, who wants to control everything in Delhi, has totally failed in managing water resources, which are mostly under his control. PM, who famously boasted his daily yoga regime in a 10acre lush green lawn (where he lives all alone) has also failed in inspiring people to conserve water.
Mandate 2019 - 3
As I begin my journey to assess the mood of the nation ahead of the general elections due in less than 10months, I find the sentiment in NCR (Delhi and surrounding areas) rather disappointing.
Most of the people I spoke to (youth, retired, students, professionals, bankers, government employees, shop keepers, traders, home makers and sundry politicians) have mostly TINA argument to support PM Modi's case.
Unlike 2013-14, when a certain section of the voters was found to be intimidated by the image of PM Modi and termed PM Modi as persona non grata, this time no such sentiment is evident.
At the same time the "large than life" image of PM Modi appears to have diminished. The count of people who believed him to be Taranhaar (the Rescuer), the one who will rid India from all ills and evils in 2014, also appears to have shrunk materially.
Initially, most people I met, blabbed the viral ballads about PM's personal conduct and achievements on social media (mostly unsubstantiated and lacking in credible evidence). However a slight probe, made them admit that TINA (There Is No Alternative) may be the only thing driving their support for PM Modi.
The popular perception about Congress president and the primary challenger remains skeptical. His lack of administrative experience, negative style of campaigning, lack of spontaneity, and random ideas, make him unacceptable to urban middle classes, in particular.
People also dread the thought of someone like BSP supremo Mayawati, TMC Chief Mamta Banerjee, or SP leader Mulayam Singh becoming consensus opposition candidate for PMship.
Unfortunately, it's all perception, and none of the people, especially youth and professionals, could offer any credible argument to support their fears about visible alternatives. Most of their arguments, opinions and view were based on social media posts with questionable authenticity.
Surprisingly, the residents of Delhi did not appear too annoyed with AAP leader Arvind Kejriwal. The maverick leader who had lost the support of middle classes is staging a decent comeback. Though none see a potential national leader in him, the positive acceptance for him may again be creeping in amongst middle classes. In the city of Delhi therefore he remains a formidable challenge to both BJP and Congress.
NCR sends a total of 22 member to the Lok Sabha - 7 each from Delhi and Haryana, 6 from UP and 2 from Rajasthan. In 2014 BJP won 21 out of 22 Lok Sabha seats in NCR, Rohtak in Haryana being the only seat won by INC.
In my assessment it is extremely unlikely for BJP to repeat the 2014 performance in this region. INLD, RLD, BSP, AAP, SP and INC all may gain at BJP expense....to continue tomorrow
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Wednesday, June 20, 2018

Mandate 2019 - 2

"I have a wish. It as a fear as well - that in my end will be my beginning."
— Che Guevara (Argentinian, 1928-1967)
Word for the day
Turophile (n)
A connoisseur or lover of cheese.
Malice towards none
Has Delhi CM been successful in drawing attention of all concerned to the issue he wanted to raise?
By the way what is the issue he is trying to draw attention towards!!!
First random thought this morning
“Politics is the study of ideal social organization (it is not, as one ·might suppose, the 'art and science of capturing and keeping office); monarchy, aristocracy, democracy, socialism, anarchism, feminism - these are the dramatis personae of political philosophy. —Story of Philosophy by Will Durant
Politicians of the day seek to turn politics into a science of capturing and keeping office. BJP President Amit Shah is obvious champion of the game. He claims to have successfully created a system to "manage" voters at house level.
The moot point remains, how politics would become people centric, from being purely power centric!

Mandate 2019 - 2

The prime minister Narendra Modi led NDA incumbent government was elected in 2014 on three primary planks (a) corruption free administration; (b) faster and sustainable development; and (c) inclusive growth encompassing all sections of the society and all regions of the country.
Many voters, who had traditionally never supported BJP, did vote for PM Modi in 2014. This included voters belonging to minority communities and socially backward classes. The traditional BJP voters (urban middle class, upper caste, traders, small businessmen) very enthusiastically canvassed for PM Modi.
Four years later, while jury is still out to judge whether the PM Modi led government has delivered on its key promises, the voters do not appear as enthusiastic about PM Modi as they were in 2014.
Recent interactions with people from cross section of society, indicate that—
(a)   A sizeable number of voters from minority community and socially backward sections of the society, who voted for BJP in 2014, still remain aligned with PM Modi. Though many of them might have returned to their previous allegiances.
(b)   BJP has failed in meaningfully enlarging its support base after astounding 2014 victory; though it has gained sizeable foothold in north eastern states.
(c)    The traditional voter of BJP is annoyed and disappointed. There is strong perception that (a) the government has failed in creating jobs; (b) MSME businesses are distressed due to implementation of GST and demonetization; and (c) BJP has ignored the core RSS agenda of Swadeshi, Uniform Civil Code, Ram Temple, supremacy of Hindutva etc. to appease minorities, poor, farmers and socially backward.
Though TINA is still holding this block of voters at ransom, there are indications that many of them may abstain from voting in 2019, thus reducing positive vote for BJP.
(d)   Congress is still a loser in the game of perception. Voters find Its leadership rather uninspiring. Under the circumstances, the chances are that any erosion in BJP's 2014 tally will add to regional parties, and we might end up with 1996 type situation.
Please note that this view is totally based on interactions with a small number of people, and may not necessarily reflect the mood of voters at large. Also, we still have almost 10months before voting begins (assuming it to be on regular schedule). The situation may change, albeit not dramatically, according to the events taking place in the interim.
The point to be pondered about is whether TINA should be allowed to determine the fate of 1.30bn Indians, or we need to have a positive reason to support PM Modi.......to continue
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Tuesday, June 19, 2018

Mandate 2019


"Cruel leaders are replaced only to have new leaders turn cruel."
— Che Guevara (Argentinian, 1928-1967)
Word for the day
Day-tripper (n)
A person who goes on a trip, especially an excursion, lasting all or part of a day but not overnight.
Malice towards none
Democracy after all is the conspiracy of mediocre majority to frustrate the brilliance.
 
First random thought this morning
The protagonist in Bollywood blockbuster Om Shanti Om, claims "if you desire something earnestly, the entire universe conspires to fulfill your wish". The dialogue became one of the most popular dialogues of all time amongst Bollywood fans.
In practice, however, a antithesis is often witnessed.
If the State wants to implement a reform, change or correction, the entire populace conspires to frustrate the State's intent.
Tom & Jerry obviously is our most favorite game!

Mandate 2019

We are less than one year away from the next general elections. Like every other general election, this election will also be keenly contested and watched. We will also have many state assembly elections also in next one year. The nation shall remain engrossed in random frivolous debates as rhetoric and shenanigans overwhelm the real issues.
New alliances will get formed and old alliances will get broken. Friends will become opponents and opponents will become friends.
Hard bargains over allotment of constituencies will fill the ambiance with idiosyncratic exuberance, as various claimants mobilize their supporters for "show of strength" demonstrations.
Streets will soon begin to bear a distinct festive look with colorful flags and posters all around; people dancing at drumbeats and chanting innovative slogans; processions of open jeeps & SUVs carrying white clad people decorated with heaps of marigold and roses, claiming to be selfless social workers, true well wishers of people, champions of development, patriots & nationalists and truly deserving to be elected.
Newspaper advertisements, posters, radio messages and social media posts by ruling parties will inform people what all the incumbent governments has achieved in their tenure. The opposition parties' will highlight what the ruling governments have miserably failed in achieving.
All parties will announce largesse for the electorate. People will be promised:
  • Free—ration, laptops, school bags, mobile phones, color televisions, bicycles, houses, toilets, etc.;
  • New—scholarships, schools & collages, factories, roads, rail lines, stations, rail stoppage schedules, will be promised/announced;
  • Uninterrupted water & electricity, sanitation, clean rivers, temple, mosques, etc.
  • Subsidized insurance, enhanced pensions, higher crop prices for farmers, lower interest for home buyers, ease of doing business for entrepreneurs, etc.
Gifts in the form of new currency notes, alcohol, blankets, sarees, school bags, tricycle for physically challenged, free health check up, etc. shall be distributed to keep the electorate happy and engaged.
In the meantime, useless things like truth, honesty, ethics, propriety, statesmanship, compassion, and other similar traits shall be carefully wrapped in a piece of white khadi cloth and stored safely in some dark corner of the closets.
Like last time (see here) InvesTrekk shall be doing an extensive coverage of the elections, from an Investors' viewpoint, over next few months. Keep watching this space for more.
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Friday, June 15, 2018

Sector rotation a trading opportunity



"The innocent are so few that two of them seldom meet - when they do meet, their victims lie strewn all round."
—Elizabeth Bowen (Irish, 1899-1973)
Word for the day
Semaphore (n)
An apparatus for conveying information by means of visual signals, as a light whose position may be changed.
Malice towards none
To a common man, who grows with stories of the valor of James Bond (more recently Tiger) and strongly believes in infallibility of MI6, CIA, KGB, Mossad, RAW etc., the recent news flow regarding Nirav Modi comes as an unpleasant shock.
 
First random thought this morning
Like in Greek mythology, all Indian politicians are Demigods. They never make mistakes. All their decisions and actions are totally dedicated to the welfare of common people and they are incapable of doing anything wrong or something that is prejudicial to the public interest.
At least I have not seen anyone admitting to, or apologizing for, a wrong decision or deed that may have hurt people. Arvind Kejriwal once admitted that his resignation from CM office in 2014 was a mistake. But he was perhaps referring to the interests of his party and not common people.
And then we have the audacity to claim ourselves followers of Mahatma Gandhi, or critics of Mahatma Gandhi, who had enough courage to admit even his most personal failings and weaknesses publicly.

Sector rotation a trading opportunity

Considering that the subject is attracting too many arguments and becoming too time consuming, I would like to close the discussion with the following final comments.
1.    I believe that the market cycle that started on 28 August 2013 (Nifty closing 5285) has already peaked on 29 January 2018 (Nifty closing 11130). The process of bottoming of the cycle has started, and may last many months. In this process, Nifty may or may not record a level higher than 11130. The bottom however shall occur in the 8250-8500 range.
2.    The mid and small cap indices may fall 20-25% more than Nifty in the process, thus erasing most of their outperformance in past five years.
3.    We may see massive rotation of sectors and size in the bottoming process, e.g., from over owned financials & commodities towards under owned Pharma, and from mid and small caps towards large cap etc. But this rotation might not be indicative of the leadership for the next market cycle. The rotation in that sense might only be a trading or defensive strategy.
4.    I shall inter alia keep a close watch on the following data points for tracking the progress of the bottoming process:
(a)   RBI panicking – watch for couple of unscheduled announcement.
(b)   Collapse in G-Sec yields below 7%. This could be preceded by a sharp spike in yields and major unexpected spike in NPA provisioning.
(c)    Crude prices falling sharply.
(d)   Nifty trading 5% or more below 200EDMA for a week.
(e)    Nobody talks about stocks at social gatherings you attend, and you get a strong urge to sell the stock you have been holding for more than 5years.
(f)    There are few large daily moves, ideally over 2% on closing basis, in Nifty.
(g)    S&P500 in USA falls below 2500 and US 10yr yields breach 2.5%.
(h)   USDINR trades above Rs70 for a week.
(i)    BJP losses both Rajasthan and MP assembly elections.
(j)    The Nifty earnings revision ration falls below 0.7.
(k)   INVIX trades above 30 for a week or so.
(l)    Advance Decline ratio falls below 0.65 for two consecutive months.
(m)  Domestic MF net flows are less than Rs5000cr for two consecutive months.
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Thursday, June 14, 2018

Investment is an art

"Nobody speaks the truth when there is something they must have."
—Elizabeth Bowen (Irish, 1899-1973)
Word for the day
Antigodlin (adj)
Lopsided or at an angle; out of alignment.
Malice towards none
What do the number of twitter followers for a person imply?
First random thought this morning
Politicians of various hues have been raising demand for full statehood for Delhi since many decades. All these politicians have got a fair chance to rule the city state in this interim. There have been long phases when the same party had governments in Delhi and the Center. There is nothing to suggest that any progress has been made in the direction of affording full statehood to Delhi. It could therefore be reasonably deduced from this that this demand is a pure political rhetoric and means a little to anyone.
Strangely, no one has even casually suggested an alternative plan to improve the state of affairs of NCT of Delhi.
An Investor's Diary
Many readers have questioned my line of study in analyzing the character of the current market cycle that in my view started in August 2013 when the RBI and the then Government began the process of fiscal and monetary corrections in right earnest with some effective measures.
The current market cycle started after correction of the excesses of 2008-09 market collapse between March 2009 and September 2009 and a long four years consolidation phase between September 2009 and August 2013.
The market cycle has seen a sub phase between May 2014 and February 2016, mostly dominated by the Euphoria created by the change in the political regime in May 2014, and subsequent normalization of the sentiments.
On macro front, the improvements that started from summer of 2013, mostly peaked in early 2016 and has started deteriorating in past few months.
I thought it appropriate to make a comparative analysis of the current market cycle with that of 1998-99, because both markets cycles have (a) overwhelming participation of the domestic household investors; (b) the real capacity (asset) addition has been poor in both the cycle; (c) valuations of mid and small cap companies saw massive, inexplicable and mostly unsustainable jump; and (d) poor return on alternatives (primarily debt, gold and real estate) was a major reason for money moving  into equities.
The key difference between two market cycles is that while 1998-99 cycle was totally driven by global dotcom Euphoria, and the new business model in which people were investing was totally unknown and untested; whereas the current cycle witnessed a variety of triggers. For example, (1) China crackdown on polluting industries provided a massive growth opportunity for Indian chemical, metals industries; (2) Public sector banks facing capital constraints due to large NPA build up, providing opportunity for well capitalized private banks and NBFCs; (3) Fiscal incentives like pay commission award, loan waivers, interest rate subvention for affordable housing, higher MSP etc, augmented the purchasing power of consumers.
In this sense, this cycle may not be akin to 1998-99 market cycle, or even 2004-2007 credit driven market cycle. I am not considering the earlier market cycles because at that time Indian markets were shallow with insignificant global participation.
The analysis of bull phase of market cycle is important because it helps in assessing the potential downside in the bear phase. In the extant episode. we would perhaps know the true character of the market cycle only with the benefit of hindsight. Nonetheless, I am inclined to work with 1998-99 estimates and seek protection accordingly.
Those who strongly disagree with me, may not be wrong at all. Investment after all is an art and not a science, in my view.

1-Nifty 50.png



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