Do it yourself

ASUSE is conducted to measure various economic and operational characteristics of unincorporated non-agriculture establishments in manufacturing, trade and other service sectors (excluding construction).

The key highlights of the survey are as follows:

Demographics

·         There are 65 million establishments belonging to unincorporated ‘manufacturing’, ‘trade’ and ‘other services sector’ in India. Out of these estimated 65mn establishments, about 55% (35.6mn) are in rural areas and about 45% (29.4mn) in urban areas. 85% (5.53cr) of these units are Own Account Establishments (OAE means no hired worker) and the remaining 15% are Hired Worker Establishments (HWE).

·         Uttar Pradesh (13.82%), West Bengal (12.03%) and Maharashtra (9.37%) have the most number of unincorporated non-agricultural establishments.

·         Maximum number of HWEs has been observed in Maharashtra (13.29%). At the same time, Uttar Pradesh comprising 14.46% of the total OAEs, becomes the State to comprise most of the OAEs of the country.

·         Telangana (43.32%), West Bengal (32.74%), and Karnataka (31.42%) are three states where more than 30% of the proprietary establishments have been run by women entrepreneurs.

·         Most of the owners of proprietary and partnership concerns belong to Other Backward Classes (OBC) (51.9%), followed by Others (30%), Scheduled Caste (SC) (13.2%) and Scheduled Tribe (ST) (4.4%) at all-India level.

Activities

·         Of these 65mn establishments 27.4% are ‘manufacturing’ units; 34.7% are engaged in ‘trade’ and 37.9% render ‘other services’.

·         ‘Other retail trade’ and ‘Manufacture of wearing apparel’ are the top two activity categories in rural areas and rural and urban combined basis also. In urban areas, ‘Other retail trade’ and ‘Other community, social and personal service activities’ reported the maximum number of establishments in the urban sector.

·         Only 3.7% of the total establishments had participation of SHGs, through financial intermediation.

Operations

·         Overall, about 41% of the total unincorporated non-agricultural establishments operate within household premises About 83.7% of HWEs are located on a permanent structure outside household premises; whereas operations of majority (about 46%) of the OAEs are home-based.

·         Only 6.4% of the total establishments reported to have maintained audited books of accounts.

Use of technology

·         23.6% of HWEs and 3% of the OAEs have used computers for business purposes during the survey period.

·         47.7% of HWEs and 16.4% of the OAEs have used the internet for entrepreneurial purposes during the reference period. Use of the internet, for entrepreneurial purposes, has increased to 13.5% from 7.7% in rural and to 30.2% from 21.6% in urban sector during ASUSE 2022-23 as compared to ASUSE 2021-22.

Employment

·         Unincorporated non-agricultural economy employed about 110mn workers during the survey period. in comparison to about 98mn workers during the previous survey, an increase of about 12mn.

·         Out of the total estimated workers, 52% (57.2mn) were from urban areas; whereas 48% (52.4mn) were in rural areas.

·         ‘Other Services’ contributed the maximum share (36.45%) to the total employment followed by ‘trading’ (35.61%) and ‘manufacturing’ (27.94%). ‘Other retail trade’ singly generated about one-third share of total employment at rural, urban and also at all-India level.

·         Overall, 25.63% of the total workers of the unincorporated nonagricultural sector, during the survey period were female.

Economic contribution

·         During the survey period GVA per establishment was Rs2.38lacs, up from Rs 2.25lacs in previous period.

·         GVA per establishment for HWEs (Rs. 8,84,310) was much higher as compared to OAEs (Rs. 1,27,073).

·         Delhi (Rs. 3,72,569) in rural, Chhattisgarh (Rs. 5,09,712) in urban and Delhi (Rs. 4,50,728) for overall (i.e., combined rural and urban) produced the maximum annual GVA per establishment.

·         Average annual emoluments paid to a hired worker was Rs.1.25lacs during the survey period.

·         During the survey period, average fixed assets owned by unincorporated nonagricultural entrepreneurs was Rs. 3.18lacs (vs Rs. 2.81lacs in previous period).

·         Outstanding loans per establishment, on average, were Rs. 50,138 at all-India level.

The Good

·         The employment conditions have improved during 1QFY25. The WPR-U improved for all ages and both genders. The Youth WPR-U improved from 39.3% (1QFY24) to 40.8% (1QFY25). For all workers, WPR-U improved 38.4% to 39.3% during this period.

·         The LFPR-U male workers improved from 57.2% in (1QFY24) to 58.9% in (1QFY25) for youth (15-29yrs) and from 73.5% to 74.7% for all workers above 15yrs of age.

·         Self-employed female workers increased in urban areas from 39.2% to 40% while the number of self-employed male workers in urban areas increased from 39.5% to 40%.

·         Unemployment rate in urban areas has reduced marginally from 6.7% (1QFY24) to 6.6% (1QFY25).

The Bad

·         The percentage of regular wage/salaried employees fell marginally from 49.2% in 1QFY24 to 49% in 1QFY25. There was a corresponding increase in the own account and self-employed workers.

·         The employment in the secondary sector (manufacturing, mining etc.) was lower in 1QFY25. More people were employed in the tertiary sector. Worker employed in the secondary sector reduced from 33.1% in 1QFY24 to 32.1% in 1QFY25.

·         The employment for female workers in “household enterprise helper” category also witnessed decline. Female employed in this sector reduced from 11.9% in 1QFY24 to 11.4% in 1QFY25.

·         The proportion of female workers declined both in agriculture and secondary sectors.

The Ugly

·         LFPR-U for female workers remains very low at 18.2% (1QFY25) vs 54.7% for males; even though it has shown improvement from 16.8% in vs 54.1% in 1QFY24. Even for Young females (15-29yr age) it remains materially lower at 16.4% (vs 50.2% for males).

·         Youth (15-29yr) unemployment in urban areas remains very high at 16.8% (23% for young females); even though it came down from 17.6% a year ago.

·         J&K (29.8%), Odisha (28%), Rajsathan (25.5%) and Assam (23.9%) had the worst youth unemployment in the country in 1QFY25. For young female workers unemployment Himachal (41.6%), Kerala (41.9%), Jharkhand (40.6%) and J&K (52.7%) were the worst state.

Conclusion

The huge gender gap in the labor force continues to be a cause of serious concern. Female workers, especially young (15-29yr) females, are getting much fewer employment opportunities. The gender gap in the workforce is persisting at alarming levels and does not augur well for the acceleration in the growth rate. If we juxtapose this data with the education statistics, we find the bridging of the education gap between male and female population has not resulted in equal opportunity for females in employment.

Another cause of concern is that the unemployment remains materially higher amongst the young workers (16.8%) as compared to overall unemployment level in urban areas (6.6%). The reason could be multifold like unemployability (skill mismatch and/or sub-standard education), reducing employment intensity of GDP, and poor employment growth in manufacturing sector. Nonetheless, it substantially diminishes the demographic dividend for the Indian economy.

Persistently, high ratio of self-employed and casual labor (over 40%), inter alia, indicates (i) lower employment elasticity in the organized sector and (ii) skill mismatch.

These comments read with the minutes of the last meeting of the Federal Open Market Committee (FOMC) provide adequate ground to believe that—

(i)      The current rate cycle has peaked out; and the next policy move will be a rate cut.

(ii)     The policymakers are confident the spike in inflation that occurred in the aftermath of Covid-19 pandemic (massive cash stimulus fueling demand and logistic challenges causing break in global supply chains) has been successfully tamed.

(iii)   The economy is no longer overheated as the pandemic stimuli have been gradually withdrawn, the job market has cooled down, and commodity prices are behaving normally.

Though Mr. Powell did not make it clear that the FOMC will cut rate in the next meeting scheduled to be held on 17-18^h September 2024; the market consensus is assuming it to be a certainty. The debate is now circling around how aggressive the Fed could be in their pursuit of policy easing. Though, Mr. Powell emphasized that the rate cut will be data driven, a majority of market participants are expecting a 25bps cut each on 18^th September, 7^th November and 18 December. Some aggressive estimates are building 50bps cut each in September and December.

I am not competent to comment on the dynamics of the US monetary policy and its implications for the global economy and markets. My concern at this time is limited to how does the likely change in the Fed’s policy stance affects my tine portfolio of investments, if at all.

In this context I note that—

·            In its last meeting, the Monetary Policy Committee of the RBI retained its policy stance of withdrawal of accommodation and maintained the status quo on policy rates by a four to two majority vote.

One of the dissenting members, emphasized that “Global uncertainties continue. The Fed, in indicating a cut in its September meeting, pointed out that since monetary policy acts with a lag they can't afford to wait until they reach their inflation target before cutting. That lag may be responsible for the sharply adverse August jobs report that has stoked recession fears and created market volatility. That a series of small signals were ignored, may have led to a critical large one. Monetary policy needs to act well in time. Spillovers led the global manufacturing PMI into contraction zone in July at 49.7.” (See here)

The other dissenting member was even forceful in his dissent, stressing, “For the last several meetings, I have been expressing concerns about the unacceptable growth sacrifice induced by a monetary policy that is excessively restrictive. The majority of the MPC however do not share this concern, perhaps because they think that the Indian economy is already growing at close to its potential growth rate. I think that such a view reflects (a) an unwarranted pessimism about the growth potential of the economy and (b) an overly sanguine expectation about growth in ensuing quarters. I disagree with both prongs of this assessment.” (See here)

This clearly highlights that despite being warned of the perils of running behind the curve and impairing the growth potential, the MPC decided to retain its stance. Maybe the RBI is not as sanguine about the price stability and growth potential as some of the members of the MPC.

·            The fourteen-month gap (July 2023 to September 2024) between the Fed pause and the first cut would be the second longest in the past five decades. The markets have been anticipating a Fed rate cut for almost a year now.

In this period, the stock markets, both the US and the Indian, have not witnessed any meaningful correction and are already at an all time high level. The question is whether the anticipated rate cut would provide immediate impetus to the markets; or the markets will be worried about further deterioration in economic growth.

It is pertinent to note that empirical evidence suggests that in the past three rate cycles, the US market has fallen 12 to 50% during the Fed rate cuts.

·         The governments in the US and India are not in a position to back up the monetary policy easing with fiscal stimuli.

Under the circumstances, for now I am more inclined to assume that:

·         It is not certain that the RBI will immediately follow the US Fed in cutting rates, unless strong evidence of growth collapsing emerges. Rise in the yield differential may attract stronger flows and support USDINR and markets.

·         A weaker USD may support commodity prices

·         A panic cut by RBI on the other hand may adversely affect the margins of banks (loans get repriced immediately while deposits take longer; CD ratio faces further pressure); and also affect the overall sentiments.

·         The earnings momentum appears to have slowed down in 1QFY25. A sharp cut by RBI might arrest the slowdown in earnings momentum; and also help higher equity valuations to sustain.

·         Negative real rates may adversely affect savers (consumption) and support capex.

I will review my portfolio in accordance with these assumptions in the next review. For now, I am just staying put.

Negative surprises outweigh, smallcap earnings failed the optimism

As per the brokerage Emkay’s report, “the ratio of negative surprises jumped sharply, from 46% to 62% for Emkay coverage and 56% to 66% for the Nifty.” The brokerage however added that “The aggregate numbers were skewed owing to the Energy sector’s 30% YoY PAT drop on a high base. EBITDA margins fell by 20bps YoY to 15.1%, mostly due to a 388bp contraction for the Energy sector – most other sectors delivered strong margins.”

Post the earnings, the consensus Nifty50 EPS witnessed a cut of 1.7% FY25 and 1% for FY26. This is the first earnings cut (though marginal) in almost a year. The Emkay report however emphasized that “The earnings revision trend for small-cap stocks was particularly weak, with zero upgrades of >5%.

Lowest PAT, EBIDTA growth in four years

A report by the brokerage house Motilal Oswal’s (MOFSL) highlighted that “Nifty reported the first quarter of a single digit EBITDA growth (5%) in four years, (last time Nifty posted single digit EBITDA growth in Sep’20). Also, 4% PAT growth is the lowest since the Pandemic quarter (June’20).”

MOFSL report further emphasized that “For the MOFSL Universe, the earnings upgrade-to-downgrade ratio has turned weaker for FY25E as 46 companies’ earnings have been upgraded by >3%, while 107 companies’ earnings have been downgraded by >3%. The earnings upgrade/downgrade ratio of 0.4x was the worst since 1QFY21. EBITDA margin of the MOFSL Universe (ex-Financials) contracted 120bp YoY to 16.3%.

Fading tailwinds

As per nuvama’s report, “In Q1FY25, BSE500 (ex-OMC) top line and PAT each grew 8–10% unlike FY24, when PAT growth (21%) far outpaced top-line growth (8%). This is owing to fading tailwinds from lower input prices and BFSI credit costs while demand remained weak.”

“Q1FY25 top line remained soft at 8%—sub-10% for a fifth straight quarter. The weakness was led by cyclicals (industrials, and autos)—the leaders of FY24—while consumption, exporters and commodities stabilized at low levels.”

NII weakness percolates down to banks’ bottom line

As per a report by ICICI Securities, credit growth was softer than usual Q1 seasonality due to additional headwinds from muted deposits growth, elevated LDR and deceleration in unsecured personal loans and NBFC segments.

“NII weakness percolated down to the bottom-line with PAT growth of ~8% YoY. On a QoQ-basis, private banks saw NII growth of ~2.5% QoQ while operating earnings were flat and PAT declined 5% QoQ.”

·         Credit growth moderated to ~1.5% QoQ in Q1FY25.

·         Deposits growth slowed down to <1% QoQ). Deposit growth for private banks was healthy at ~17% YoY, but drag from PSU banks (up <10% YoY) slowed systemic deposits growth to ~13% YoY in Q1FY25.

·         CASA growth remains challenging (in single digit YoY) while term deposits continued to do the heavy lifting.

·         Rise in cost of deposits was calibrated, though rate hikes by SBI/HDFCB in Q1 and persistently soft deposits growth suggest risk on the upside.

·         NIM decline was contained partly due to a strong rise in yields on investment. Moderating loan growth and pressure on NIM resulted in slower NII growth. Adj. NII growth for private banks moderated to ~14% YoY (vs. ~16% YoY loan growth).

Management commentary positive

As per the Antique Stock Broking, Overall management commentary has been positive, key takeaways are: a) IT companies believe that lower inflation and interest rate could lead to improvement in the US macro environment; b) Consumer companies are seeing signs of rural recovery which may further accentuate with the above normal monsoon; c) Domestic private capex is seeing traction, particularly in the real estate; (d) Banks have tightened credit filters for unsecured lending. HDFC Bank highlighted that it will grow slower on advances as against deposits in order to bring down loan to deposit ratio.”

Investors should cut the noise and stay focused on earnings

In my view, 2QFY25 and 3QFY25 are critical for investors, especially for household (retail) investors who are predominately invested in smallcap, midcap and narrative (defense, railway, clean energy, China+1, etc.) stocks. If the earnings momentum fails to match their optimism; or headwinds develop in terms of slower global growth momentum and negative flows; these stocks could face sharper correction in 2025.

It is therefore desirable for them to stay focused on earnings and growth momentum rather than bothering about big picture things like geopolitics, the US fed monetary policy; yen carry trade etc.

The question is “whether, in the normal course, every legislation, policy, programs and practices framed and pursued by the Parliament and Executive ought to be congruent with the Preamble, to be constitutionally legitimate? Is it unreasonable to expect that the legislature and policymakers put all legislation, policies, programs and practices framed by them through the test of this declaration, before these are implemented? To clarify, these questions need to be examined considering the present status of the Constitutional mandate, without going into to the merits of this declaration in the Preamble.

As an investor, I find it relevant to examine the suitability of investments in public sector enterprises in light of the constitutional mandate for the government to be ‘socialist”.

From various sources, I gather the following three objectives of setting up commercial public sector enterprises in India.

·         Provide basic goods and services to the citizens; provide employment opportunities; and promote economic development.

·         Play a key role in the development of infrastructure; promote exports and encourage private investment.

·         Protect the interests of weaker sections of society.

Profiteering is definitely not one of the key objectives of the public sector enterprises. So, when we read the following headlines in newspapers, questions about sustainability, desirability and constitutional ethics are natural to arise.

“At Rs 16,884 crore, SBI posts highest quarterly profit”

“Minimum Balance Penalties: Public Sector Banks Collect Around Rs 8,500 Crore in Five Years”

“Railways earned ₹1,230 crore from cancelled waiting list tickets in span of 3 years”

The objective of the nationalization of banks in 1970 was “to control the heights of the economy and to meet progressively, and serve better, the needs of development of the economy in conformity with national policy and objectives”. To my knowledge it has not been changed so far. Making profit from poor depositors who are unable to maintain minimum deposit is ultra vires the primary objective of bank nationalization. Similarly, charging a fee on automatic cancellation of waitlisted rail tickets is untenable.

If the government wants the public sector enterprises to be as profitable as their private sector counterparts, it should either privatize these enterprises or make necessary changes in the constitution and other related legislations clearly outlining the change in the legislative intent. Till this happens, I shall continue to avoid investing in PSEs.

I am however not sensing any imminent rate cut, for the following simple reasons.

(i)      The headline inflation number is significantly impacted by a strong base effect, as the CPI inflation in the base period (July 2023) was 7.4%. Sequentially, the inflation has risen 1.42% MoM in July 2024 against 1.33% MoM rise in June 2024. As of now, there is no indication of a sustainable decline in inflation trajectory.

(ii)     Core CPI inflation in July 2024 was 3.3% against 3.1% in the preceding two months. This is the first rise in core CPI after twelve months of consistent decline.

(iii)   Food inflation remained sticky, rising 2.47% in July 2024 after a 2.69% rise in June 2024. Vegetable prices were higher by 14% MoM in July 2024. It is pertinent to recall that the RBI governor laid significant emphasis on food inflation in his bi-monthly monetary policy statement.

The governor stated, “our target is the headline inflation wherein food inflation has a weight of about 46 per cent. With this high share of food in the consumption basket, food inflation pressures cannot be ignored. Further, the public at large understands inflation more in terms of food inflation than the other components of headline inflation. Therefore, we cannot and should not become complacent merely because core inflation has fallen considerably”.

He further added, “high food inflation adversely affects household inflation expectations, which have a significant impact on future trajectory of inflation. Household inflation expectations, after witnessing a moderating trend between May 2022 and September 2023, have edged up on the back of high food inflation since November 2023.35 Persistently high food inflation and unanchored inflation expectations – if they materialise – could lead to spillovers to core inflation through pick-up in wages on cost-of-living considerations. This, in turn, could be passed on by firms in the form of higher prices for services as well as goods, especially in a scenario of strong aggregate demand. Third, these behavioural changes can then result in overall inflation becoming sticky, even after food inflation recedes.”

He categorically admitted that “The MPC may look through high food inflation if it is transitory; but in an environment of persisting high food inflation, as we are experiencing now, the MPC cannot afford to do so. It has to remain vigilant to prevent spillovers or second round effects from persistent food inflation and preserve the gains made so far in monetary policy credibility.”

(iv)    As per the latest Households’ Inflation Expectation Survey (August 2024), A larger share of households expects higher general prices and inflation as compared to the previous survey round. Households’ median perception of current inflation rose by 20bps to 8.2% in the latest survey round; their inflation expectations for the three months and one year ahead periods also increased by 20bps each.

The market trends in August indicate that vegetable prices have recorded material rise in the month of August also due to crop damage by excess rains and logistic issues. It is therefor likely that August food inflation may come even higher. Expecting any rate cut on 9^th October may therefore not be reasonable; unless the US Fed cuts dramatically in September, raising the
specter of recession.

The Indian indices have not fallen materially from their recent highs. The benchmark Nifty is barely down three odd percent from the highs it recorded last week. Obviously, in India, the household investors are not yet worrying about the possibilities of a bear market, as for them the sky is still bright blue with few scattered cumulus clouds. Nonetheless, this phrase is gaining frequency in the personal discussions.

From my various interactions with the market participants, I gather that many of them may have a different, and often misplaced, understanding of the concept of bear market.

The most widely accepted explanation of a bear market is “a 20% or more decline in the benchmark index for a sustained period of time.” This decline in market indices is usually accompanied by growth pessimism and change in the asset allocation in favor of less risky assets. Capital preservation takes precedence over wealth maximization, as the primary investment objective.

The key elements of a bear market, therefore, are growth pessimism; and wider asset allocation shifts towards less risky assets to preserve capital by sacrificing potential gains from equity. Fall in market indices is the most common consequence of a bear market. 20% fall in indices is just an indicative number based on empirical studies of previous bear markets. It is however not a precondition for a bear market.

Bear markets can, at times, last for many years. Japanese equities witnessed the longest bear market running for more than two decades. Chinese equities are in a bear market for over 15 years for now. Bear market in the US tech stock lasted for almost a decade after the bursting of the dotcom bubble in the year 2000. In India, bear markets have usually not lasted for more than 3 years.

It is important to understand that ‘bear market’ is a fundamental concept. It is not related to technical analysis or trend analysis of the market. For technical analysts the markets are defined on the basis of the current trend in the indices. These trends (uptrend, downtrend, sideways) can change in a couple of days. At times these trends could be incongruent to the fundamental trends, thereby causing irrationalities (extreme buoyancy or pessimism) in the markets. These irrational market conditions should normally be not considered bull or bear markets.

Where do we stand?

In my view, in strict technical terms the current uptrend in Nifty50 that started from October-November 2023 has terminated earlier this week. Nifty may move in a 5 +/- band (23100-25500) for a few weeks before a new trend emerges. At present the probability of a downtrend is higher than the uptrend. In case of a downtrend Nifty50 may yield 80% to 100% of the upmove from 19080 level. In case of extreme pessimism, Nifty50 may even fall to 17800 level for a few days. This downtrend may last anywhere between 9 to 17 months.

Fundamentally, currently there is no evidence of growth pessimism, or asset allocation shift. In fact, the growth estimates are getting revised upwards, earnings buoyancy has slowed down a bit buy still a long distance from material deceleration. Allocation to equities remains strong. I shall be closely watching these trends over the next 6 months for any indication of worsening, to bother about a bear market in Indian equities.

It may be pertinent to note that it is not Berkshire Hathaway alone. A number of reputable investors have taken note of the conspicuous warning signs flashing on billboards for the past few months in particular.

Yen carry-trade

Hike in the policy rates by the Bank of Japan (BoJ) and strengthening of Japan is perhaps the most talked about event in the market space. Young traders in their twenties, with one or two years of trading experience are confidently talking about the disastrous impact unwinding of “JPY carry trade” will have on the global markets, almost trivializing this important event.

World War III

The older and more mature investors on the other hand are preferring to discuss the impending World War (WWIII). They are worrying that (i) the countries producing about 60% of the global energy resources may be on the one side of this war; (ii) most NATO members may not be fully committed to the cause, due to economic and demographic constraints; (iii) many western countries may implode due to a strong internal resistance to the war at Israel’s behest; and last but most important (iv) the war this time will involve the fragile and totally intertwined digital world, which could be more debilitating.

US recession

A sharp rise in unemployment indicators; a marked slow-down in real estate market; the Federal Reserve hinting a rate cut on the table and the markets extrapolating it to full one percentage point cut in 2024 leading to sharp fall in bond yields; hedge funds raising their short position in commodities to the highest in over a decade; etc. have triggered a wave of concerns over sustainability of stock market euphoria in the US; especially the high valuations for a few technology stocks that have been at the core of the US equity bull market in the Post-Covid period.

Is a 2008 like collapse coming

In my view, there are genuine concerns for the market at present. However, the present narrative, which is revolving around the yield curves (and whether the central bankers are running much behind the curve) and geopolitics, may not be enough to cause a market collapse like 2008-09. We may need something bigger to break.

My worries

Notwithstanding, my worries are as follows:

·         Unlike 2008-09, the global economic growth is not strong. China and India were growing 8-11% 15 years ago. Now both are struggling in the 5-7% band; more so China.

·         In 2008-2013 the peripheral Europe faced problems that caused a lot of volatility and concerns in the global markets. A US$32bn bailout of Greece made headlines for many weeks. Sovereign debts Portugal, Iceland, Greece and Spain (PIGS) totalling less than US$120bn were primary talks of the table. But this time it is in Europe. Germany, France, and the UK are facing problems – economic, demographic, social and political. The primary talk of the table now is US$35trn debt of the US, ~US$10 trillion debt of Japan and mammoth but unknown amount of bad loans in the Chinese banking system.

·         In 2008-09, most countries had adequate financial leverage to stimulate their respective economies and mitigate the impact of the crisis. Today, not many global economies enjoy that kind of fiscal leverage. The recovery this time therefore could be a slow and long-drawn process.

·         2008-09 was more of a financial market crisis than an economic crisis. This time it might be an economic crisis driving the financial markets into a deep abyss. Moreover, the treasury bonds of many large global economies are technically junk (dipropionate to their respective GDP and debt servicing capabilities). Selling more of this to bail out struggling markets and economies may not be feasible.

·         A large number of developed and developing countries are facing internal social and political unrest. Besides, the mutual trust that characterized the globally coordinated action in 2008-09 may not be prevalent today. The efforts of various global powers may be focused on sinking the larger ships rather than bailing out the smaller boats.

Insofar as India is concerned, there are not much macro concerns at present; though the fiscal leverage to provide meaningful stimulus in case of a wider crisis may be limited. On the market valuation side, few pockets are clearly in bubble territory and need to retrace a long way back to the realm of sanity. Otherwise, a large part of the market is fairly valued. Maybe a 10% correction would make it look attractive again.

Nonetheless, when a global tide comes, it will also take the Indian markets along. No escape from higher volatility and jittery trades.

Interesting time ahead, for sure!