"The intelligent are to
the intelligentsia what a gentleman is to a gent."
—Stanley Baldwin (English,
1867-1947)
Word for the day
Calescent (adj)
Growing warm; increasing in heat.
Malice towards none
Why no one is taking Varun
Gandhi seriously?
First random thought this morning
A 6 X 6 temporary shelter has transformed into a massive temple
structure, housing 108ft tall Hanuman statute in past two decades or so. It is not
in a forest or some hidden by lanes of an unauthorized neighborhood. This is
right in the center, at one of most busy crossings, of the city. In fact, in
past one decade or so it has become the symbol of Delhi, insofar as the
Bollywood movies are concerned. A metro train passing by this statute is one of
the most common scene in any movie shot in the city.
About 200meters away from this place, tucked in a reserved forest
land close to sensitive radio installations of security agencies, is the
allegedly unauthorized Asharm of jailed Asaram.
And suddenly, High Court is asking who permitted all this!
Economic and market review - 1
In recent weeks, a number of experts have warned markets against
avoidable exuberance. The markets have though brushed aside all warnings and
risk assets, including the much maligned Bitcoins, have registered impressive
gains.
A host of global macro data has already hinted that the global
growth is threatened by the trade related tensions building in various pockets
of global economy.
Besides, the process of normalization of non-conventional monetary
policies, in practice since the last global financial crisis, has also begun in
right earnest. US Fed has already withdrawn the QE completely and raised
interest rate multiple times in past 4yrs. ECB is scheduled to end QE by the
end of 2018 and has already hinted at rate hikes next year. BoJ has also given
signals about beginning of a tightening cycle as early as from 2019.
Back home, the economy has recovered from the impact of
demonetization and GST. The consumption demand has been encouraging in past few
quarters. However, there is little to suggest that the economy can gather
enough velocity to break past the current rate of growth in near future.
Inflation is already running higher the RBI's comfort level.
Elevated energy prices and slower are constraining both current account and
fiscal balance.
Fiscal constraints have also slowed down public spending, which
has supported the growth in past three years.
The current earning season has mostly been a mixed bag. On
aggregate basis, the earnings look marginally below the street estimates.
However, there have been pockets of strong growth. As per Motilal Oswal
Securities, "Consumption recovery continues with most of the FMCG
companies highlighting rural outperformance vs. urban. 2] Within Banks, Private
Banks have seen some margin pressures while PSU Banks have reported moderation
in fresh slippage generation. NBFC’s post another quarter of healthy core
performance. 3] Auto companies have missed profitability estimates led by RM
cost pressures and lower other income while demand outlook remains healthy. 4]
In IT the demand is showing gradual improvement with continued outperformance
of Tier II companies vs. Tier I. 5] Cost pressures have marred the
profitability of Cement companies even as volume growth remains in –line.
Foreign flows have mostly been negative in past few months, even
though in past couple of weeks the selling pressure seems to have eased a bit.
Domestic fund flows have also tapered in past 3months, even though SIP flows
have sustained.
In past 6months Indian equities have mostly
shown a divergent trend. While the benchmark indices have scaled new highs, the
broader markets have underperformed conspicuously. In past couple of week,
however, the broader markets have done reasonably well. In next few days, I
shall discuss all these trends in some detail.
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