Some food for thought
"Adapt or perish, now as ever, is nature's inexorable imperative."
—H. G. Wells (English Author, 1866-1946)
Word for the day
Coup de foudre (n)
Love at first sight.
First random thought this morning
Last week, RSS held its first ever open house in New Delhi. They
invited reputed people from all walks of life to join them in comprehensive
dialogue. The stated objectives were to (a) clarify RSS's vision on the India
of future; and (b) alleviate misgivings about RSS and thus gain wider
acceptance for itself in the society, especially the segments of the society
that have remain apathetic to it since assassination of Mahatma Gandhi in 1948.
However, the discourse post three day event suggests that the
event has raised more questions in people's mind, than it has answered.
The so called "liberals" and "secular
parties" are refusing to believe RSS Chief. They are taking the event just
as poll campaign of BJP to gain some secular, liberal and minority votes. Some
are even interpreting it to be sign of BJP nervousness ahead of key state polls
scheduled to be held later this year.
Many feel that RSS is bidding aggressively to gain support of
Non-BJP parties for its agenda of cultural (Hindu) nationalism.
BJP, which has so far claimed to be the only legitimate claimant
to the political support of RSS workers and sympathizers, might actually feel
threatened by this outreach. Especially, if few other parties take Mr.
Bhagwat's view at face value and come closer to RSS.
Second, with the kind ease Mr. Bhagwat presented the radical
changes in RSS ideology on Hindi, Hindu, Women, 377, etc., it seems to have totally
stumped many right wing fundamentalists. They suddenly find the ground below
their feet drifting apart.
Besides, it may also motivate many committed RSS workers and
sympathizers to look beyond BJP in politics.
I do not know about others, but I drew a lot of comfort from Mr.
Bhagwat's presentations and answers. He has categorically endorsed a lot of my
views, which I had been sharing with my readers since past many years. This
gives a lot of confidence that my thought process and direction is correct.
Not so happy Diwali
Last week I made my usual quarterly visit to the wholesale
markets of Delhi. I would like to share the following observations with
readers, as I believe that these observations may provide some useful clues for
review of their investment strategy.
(a) Most traders
indicated that the demand has been poor for past 4months. Traders across trades
(textile, chemical, household goods, decorative items, sanitary ware, food,
spices, stationary, wood & plywood, et. al.) have significantly reduced
their inventory level. Even though the festival season is less than two weeks
away, no one is expecting any material inventory buildup for festival demand.
(b) The primary
reasons cited for the poor demand were as follows:
(i) The consumer
demand, particularly from rural and semi-rural areas has been weak.
(ii) Working capital
financing has become scarce and expensive, at a time when the working capital
requirement is increasing. The credit cycle has worsened. Banks are reluctant
to lend. Only two private sector banks are lending aggressively, taking
avoidable risk.
(iii) Shortage of cash
is pinching everyone. The impact is more visible in rural areas and smaller
towns.
(iv) Imports from
China are lower. INR weakness vs. USD has impacted demand for dry fruits and
confectionary.
(v) GST glitches are
still many and hurtful.
I suspect that we may see the reflection of this trend in the
subsequent corporate results. In particular, I find the investors in consumer
companies are susceptible to disappointment.
The carnage in financial stocks in past few days may just be a
harbinger of the days to come. In my view, it is reasonable to expect - (a)
lower margins; (b) poor credit growth; and (c) elevated stress level as new
areas of stress emerge.
Consequently, market in its collective wisdom may choose to
de-rate these stocks.
I find it pertinent to reiterate the investment strategy shared
with my readers in mid July
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