Do it yourself

The recent move in prices of some popular e-commerce stocks listed in India has caught the eye of the market participants. These stocks have sharply outperformed the benchmark Nifty50, Nifty IT and even NASDAQ in the past one month. Notably, these stocks have been sharply underperforming the markets for the past one year particularly. Most of these stocks have lost about two third of value from their respective all time high stock price levels. Many investors who had bought these stocks in the 2021-2022 frenzy have seen material erosion in their investment value. It is therefore pertinent to examine, from the individual investors’ viewpoint, whether the tide is turning for these companies; to assess whether they should stay invested, buy more or consider using the latest price rally to exit their positions. Use your own parameters One grave mistake small investors usually make while investing in the stock of a company, is to use the valuation matrices followed by specialized invest...

FY24 Economic Outlook (India Ratings) India Ratings and Research (Ind-Ra) expects GDP to grow 5.9% yoy in FY24. Although National Statistical Organisation’s (NSO) first advanced estimate (AE) of FY23 GDP is 7.0%, it does not expect the growth momentum witnessed in 1HFY23 to sustain in 2HFY23. NSO estimates GDP growth to drop to 4.5% in 2HFY23 from 9.7% in 1HFY23. The pent-up demand which had provided thrust to the growth is normalising, exports which had been buoyant are facing headwinds from the global growth slowdown and credit growth is facing tighter financial conditions. The International Monetary Fund expects the global GDP growth to fall to 2.9% in 2023 from an estimated 3.4% in 2022. Ind-Ra expects PFCE to grow 6.7% yoy in FY24 (FY23: 7.7%). Yet, it may not lead to a broad-based consumption demand recovery, because the current consumption demand is highly skewed in favour of the goods and services consumed largely by the households belonging to the upper income bracket. The...

Continuing from yesterday   ( The great Indian carnival ) With the presentation of the union budget earlier this month, the incumbent government has entered the final phase of preparations for the 2024 general elections. The preparations would be tested in several state assembly elections to be held prior to the general elections. Amongst these Karnataka, Madhya Pradesh and Rajasthan shall be keen contests. As per most of the recent surveys, the ruling National Democratic Alliance (NDA) led by Prime Minister Narendra Modi, is likely to return to power for a third successive term in 2024. The alliance is mostly riding on the popularity of PM Modi for its electoral success. Of course the lack of a strong national alternative is also working in favour of the incumbent government, to some extent. It is therefore pertinent to examine what PM Modi has done right to maintain its popularity for the past nine years. I would not like to delve into the role of the political strategy of BJP in...

Festivals are quintessential to the idea of India. No one can imagine India excluding the hundreds of festivals we celebrate. There is hardly any day on the calendar that is not marked with a religious observance or a social celebration. As a community we are so addicted to festivities that we even celebrate sporting events as festivals. Not surprising, political events like elections, local level political appointments, conventions of political parties, etc. are also celebrated as major festivals in India. The largest festival in the world, Indian general election, is scheduled to be held in about one year from now. All political parties, like the troops participating in the annual carnival in Brazil, have already started preparing for the quinquennial event. The potential 950million voters are also looking forward to it; though one third of them may actually not bother to exercise their franchise. In most major democracies in the world, the incumbent leadership and/or party seeks ree...

The Reserve Bank of India has increased the policy repo rate six times in the current financial year (FY23). It has continued to withdraw excess liquidity from the financial system through various means and has mostly maintained a hawkish demeanor, insofar as the policy outlook is concerned. In spite of (i) aggressive rate hikes; (ii) withdrawal of excess liquidity from the system; (iii) sharp correction in global commodity prices (especially energy); (iv) restoration of supply chains that had got damaged during pandemic resulting in severe supply shortage of key raw materials and inputs; (vi) three consecutive normal monsoon seasons yielding bumper crops; and (vi) slow growth – CPI inflation has persisted above the RBI tolerance range of 4 to 6% and credit growth has accelerated and remained strong. Obviously there is a disconnect somewhere. Even one third of the members of the Monetary Policy Committee of the RBI do not agree with the policy stance of the RBI and have voted against...

Assumptions Have Consequences (John Mauldin) Remember National Lampoon’s Vacation? It was a 1983 comedy film in which suburban dad Clark Griswold (Chevy Chase) takes his family on a cross-country road trip to the fabled Walley World amusement park. Clark made one critical mistake, though. He assumed Walley World would be open and waiting for them. This was to be the family’s reward for a long, stressful journey. His assumption was...incorrect. Many have noted the word’s first three letters hint at how assumption can make an ass out of u and me. Yet we must assume some things or life becomes impossible. Assumptions can be wise or unwise. They can be unduly optimistic or excessively pessimistic. Slightly different assumptions can produce giant changes in predicted outcomes. Assumptions are necessary but we shouldn’t make them lightly, nor forget we are making them. This is important because assumptions abound in our assessments of the economy and markets. They tend to sort of f...

  It was spring of the year 2022. The news flow was worsening every day. The Russia-Ukraine conflict was dominating the global media headlines. NATO-Russia acrimony was at its worst since the cold war era. China committed to a zero Covid policy and implemented strict mobility restrictions, further impacting the global supply chains. Inflation was beginning to spike and most central bankers were ready to embark on an accelerated tightening cycle. Back home, the enthusiasm created by a path breaking budget had not survived even for a whole week. Issues like macroeconomics (growth, inflation, current account, yields, INR), geopolitics (Russia-Ukraine), politics (state elections) and persistent selling by foreign portfolio investors (FPIs) was dominating the market narrative. The trends in corporate earnings also were not helpful to the cause of market participants. By early March 2022, the benchmark indices had fallen substantially from their highest levels recorded till then, between...

In the past one year, inflation has been one of the primary concerns for most countries across the globe. Rising prices of food and energy in particular have materially impacted the lives of common people on all continents. The central bankers of most major economies have hiked policy rates in the past one year to control inflation. In the current year 2023 so far, 13 major central bankers have taken policy action(s) and all of these actions have been hike in policy rates. However, in recent weeks inflation has shown some tendency of cooling down. It is difficult to assess how much of this cooling down is due to tighter monetary conditions; and how much could be attributed to other factors like restoration of supply chains that were broken during the pandemic and warmer winters resulting in lower energy demand in the northern hemisphere, etc. Nonetheless, some central bankers have adjusted the pace of tightening to smaller hikes. Most of them, though remain...