Do it yourself

Strategy: Are companies and investors both being ‘short-termish’? (Kotak Securities) We are quite puzzled by (1) consumer companies’ excessive focus on near-term profitability and (2) investors’ endorsement of the same. Companies seem willing to compromise on market share and volumes to improve profitability. However, this strategy may create fertile ground for more competition from regional players in the short term and from new entrants in the short to medium term. Their high profitability and returns are unlikely to sustain anyway, given weakening business moats and models. Consumer companies focusing on near-term profitability, despite weak demand The sharp improvement in profitability of consumer companies in the past four quarters, despite sluggish demand would suggest that they are prioritizing profitability over volumes. In fact, the profitability of automobile companies has risen dramatically in FY2023, despite a sharp increase in RM prices over FY2022-23 and collapse in...

  INDIA, that is BHARAT, and WE, THE PEOPLE OF INDIA, are facing a multitude of problems. Many of these problems have their genesis in the (i) Gradual degeneration of social customs & traditions, cultural practices, and religious rituals; (ii) exploitation and oppression by the colonial rulers, and (iii) inadequate & flawed policies adopted by the successive governments post-independence in 1947. Some more recent problems have arisen from (a) the attempts to accelerate growth through, for example, unsustainable means, and (b) extreme political opportunism. These problems could be classified into three broad categories – (1) Political Problems, (2) Economic Problems, and (3) Social problems. Political problem The political problem in India is to develop a political ecosystem that fully assimilates the aspirations of the people, addresses specific local problems, promotes mutual trust & harmony, bars incompetence and knavery from public office, and ensures that the ...

  Continuing from yesterday ( Battle Ground 2024 – 1 ) The political forces of all hues and colors have set out to join the battle for supremacy in 2024. Most non-political forces have also declared allegiance to the two primary alliances. There are few yet to join any of the main groupings; maybe they are waiting for some assurances about their roles during and after the battle. However, one thing appears certain – this battle is like the battle of Mahabharata, in which staying neutral is not an option. The narrative and rhetoric Both alliances are trying to set a narrative to influence the voters in preparation for the battle. As usual, the narratives are based on rhetoric and the promise of a better future. On the basis of several official statements, promotion campaigns, and media reports I decipher the following narratives and rhetoric to support these. The NDA narrative could be briefly explained as – “Under the brilliant leadership of Prime Minister Narendra Modi, I...

In about ten months from now, Indian citizens will vote to elect a government that will govern the country for the next five years. The general elections that would likely be held during March-May 2024 are widely recognized as the largest carnival of democracy in the world. About one billion voters would be eligible to exercise their franchise in 2024. Even a 60% participation would mean 600 million voters casting their vote; more than 4x the number of eligible voters cast in the 2019 US elections. The election carnival in fact begins six months early with some key states holding elections for their respective state legislative assemblies. Historically, the correlation between the results of state assembly elections and the subsequent general elections has not been significant. For example, in 2018, the ruling NDA lost all four state elections (Madhya Pradesh, Rajasthan, Chhattisgarh, and Telangana) but went on to win the 2019 general election with a huge majority. Regardless, these ...

Economy: Weak input inflation and pullback in June trade (AXIS Capital) Input inflation continues to fall and should exert downward pressure on CPI goods inflation hereafter. Meanwhile, trade trends are showing signs of weakness after a sustained improvement in recent months. On the one hand, the moderation in the global industrial cycle, as seen from manufacturing PMIs due to tighter financing conditions, could keep a lid on India’s goods exports growth. On the other hand, pockets of buoyant domestic demand and food inflation will likely dictate RBI’s pause. June merchandise trade deficit fell by USD 2 bn to USD 20.1 bn, led by a weaker oil imports bill. Exports, in value terms, have slowed further, on ‘gems & jewelry’, engineering goods, and petroleum. Meanwhile, the imports bill was also weaker, led by oil, coal, machinery, and electronics. Our volume estimates for goods trade also indicate some pullback in exports and imports after witnessing a ramp-up in May. Weaker petro...

One of the several global trends that have been developing in the past decade, in particular, is the dissipation of the US dominance in the game of Lawn Tennis. The game that was dominated by US players for several decades does not have any commonly recognizable US players. The list of top 10 rank players in the ATP Men ranking has only two US names – Taylor Fritz (9) and Frances Tiafoe (10); while the rest eight are all European players. In women ranking also only two US names – Jessica Pegula (4) and Coco Gauff (7) – appear in the top 10 lists. Within Europe also, players from Eastern Europe are dominating the court, versus Germany, the UK, and France which had a significant presence in the game for decades. It would be interesting to study if there is a correlation between losing dominance on the Tennis court and losing dominance on the mint streets (economic muscle) and battlefields (strategic power). In the past decade, the US has ceded significant economic power to China. For...