Some food for thought
"Never reach out your
hand unless you're willing to extend an arm."
—(Pope Paul VI, Italian
clergyman, 1897-1978)
Word for the day
Sequacious (adj)
Following, imitating, or serving another person, especially
unreasoningly.
First random thought this morning
Waiting at a hotel reception in Agra 10days ago, I casually
picked up a piece of local newspaper. It was incidentally the matrimonial page
of the weekend paper.
I have always found the weekend matrimonial pages of local newspapers
a reflection of the current social pattern and emerging trends.
From the piece of paper I picked up, I found the following two
insertions of particular interest. These insertions not only expose the
hypocrisy of society, but ridicule all the claims of changing mindsets.
Nonetheless, these insertions provide enough comfort that more the things
appear changing from media headlines, the more they remain same. The journey of
many social reforms lasts only from page 1 of the newspaper to page 11.
This insertion highlights two key trends:
(a) People are
bothered least about unethical and possible corrupt behavior in public life.
Rather, they may be quite audacious in admitting this. Principal of a
government aided inter collage owning and running a personal high school is a
clear conflict of interest, even if it prima facie does not prove any
corruption.
(b) The prospective
groom is apparently an associate editor with a prime national news channel. As
a media person, he is supposed to be more upright and aware about these issues.
But obviously he too does not bother.
The second insertion also highlights two things:
(a) Studying and
working in a developed society like USA, does not necessarily changes mindset
of a person. This professor of a USA university wants to marry beautiful girl;
nothing wrong in this. But he does not mind if the girl is not educated. That
sounds bizarre.
(b) #MeToo campaign
may have too long and arduous road to travel, even in USA.
No space for complacency
The US$100/bbl calls have suddenly faded to the backstage and
US$25/bbl sounds are again audible from a distance.
People betting on INRUSD 80 are also back to their thinking
pods.
The benchmark 10yr yields are also cooler at 7.7%, making the
investors who redeemed their bond funds in a tearing hurry last month red
faced. The experts frequently seen on business channels are discussing should
RBI cut now or wait for couple of more months. Just a few weeks ago, they were
lamenting RBI for running behind the curve and not hiking the rates fast enough
to protect INR.
Reportedly, the amount of monthly inflows through SIPs in equity
mutual funds has been highest ever at Rs7900cr in October 2018. The equity fund
in general received inflows of Rs12600cr odd in October, the highest since
April 2018.
All the clouds suddenly appeared to have blown away. The sky is
sparkling blue!
(a) The market may
continue to remain volatile in next 12months. Implied volatility has so far
remain stuck in lower range. We may see episodes of sharp spikes in India VIX
in next 12months.
(b) The overall
returns from Indian equities may be very low single digit or negative in next
12months.
(c) Small and midcap
may continue to underperform the benchmark. But total divergence in the
direction of benchmark and broader market indices may end. Expect a sharper
fall in benchmark indices in next 12months.
(d) Financials,
consumer non-discretionary, and capex themes may suffer more than others.
Global commodities may suffer badly, before any recovering sets in.
(e) Indian equities
may suffer de-rating as political chaos clouds growth outlook.
(f) INR may continue
to be supported by higher yields and RBI intervention. INRUSD may stabilize
around 68.50, after witnessing some volatile moves in the interim.
(g) Bond yields may
touch a high of 8.30%, and average above 7.5% in next 12months.
(h) Real estate
prices may stabilize in most geographies and continue to recover in select
geographies."
Incidentally, most of it has come true.
I therefore am not bothering about the recent movements in crude
prices, bond yields, INRUSD, or the movement in equity indices.
The hard facts are —
1. Benchmark indices
are virtually flat YTD.
2. Earnings momentum
that promised to pick up in 1QFY19, has mostly fizzled. The earnings downgrades
are accelerating.
3. The concerns over
global growth momentum are rising further. Japan slipped into recession in
2Q2018. (May
also read this)
4. Global
commodities have fallen materially, raising the specter of deflation in 2019.
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