Do it yourself

One thing that the prime minister Narendra Modi is well known for is his business friendliness. At the core of the famous Gujarat Model, that shot Mr. Modi to the national and international scene, was his claim of making Gujarat the most business-friendly state in India. He is also often accused by the opposition parties for unduly favoring the large corporate at the expense of micro and small enterprises and middle-class households. In the past ten years, the policies followed by the PM Modi led central governments have stayed true to his reputation. For example— ·          The effective tax rates of the corporate sector have been reduced. This has resulted in the aggregate tax collection from individual taxpayers to rise higher than the tax paid by corporations. ·          It is widely believed that the demonetization of high value currency notes and the implementation of GST have also adversely affe...

Shri Ram Janmabhoomi Teerth Kshetra (SRJBTKshetra), a public trust, is building a grand temple dedicated to Lord Rama at his birthplace in Ayodhya of Uttar Pradesh. Recently, the consecration ceremony of Lord Rama’s idol at the temple was performed with great fervor. To facilitate the devotees visiting the temple, the Government of Uttar Pradesh and the Central Government are investing in developing civil infrastructure in and around the Ayodhya town. Reportedly, the Master Plan 2031 envisages the redevelopment of Ayodhya to be completed over 10 years with an investment of over Rs 85,000 crore. This is expected to establish Ayodhya town prominently on the world tourist map. It is pertinent to note that just three years ago, Ayodhya was a small municipal town with a population of approximately 70000 with poor civil infrastructure. Impressed by the government’s investment in Ayodhya’s civil infrastructure, Global brokerage firm Jefferies commented in a report, “The grand opening of the R...

Yesterday’s post ( China+1...rhetoric apart ) evoked a rather aggressive response from some readers. They strongly disagree with my skepticism about China+1 strategy, at least in the short term (5-7yrs). Some of them claim to have already witnessed the stupendous results of this strategy for many Indian corporations. Since my posts are mostly my personal views and observations, criticism does not affect me. I usually politely agree to disagree. I would thus avoid responding to criticism or the views to the contrary. Nonetheless, I may reemphasize my views as follows: ·          In the short-term (5-7 yrs) any business or investment strategy that assumes substantial decoupling of China from India’s trade specifically, and Western countries in general, may not be successful. ·          Presently, China+1 trade is confined to a few businesses (not sectors), where (i) China has explicitly implemented capac...

  “No one was ever lost on a straight road.” Last time I wrote this was about 13 months ago when the Nifty was around 16000. The benchmark has gained over 17% since then. PSU Banks, FMCG, and Automobile sectors, which were not exactly favorites of market participants at that point in time, have been the top performers since then. The favorites of that time, e.g., Metals, Infrastructure, manufacturing, and digital have mostly performed in line with the benchmark or underperformed. I find it appropriate to reiterate and reemphasize it, to motivate me to stay true to my investment strategy and not get distracted by the market noise, buoyant arguments and gravity defying moves in a number of stocks. The conventional wisdom guides that roads are meant for moving forward and trampolines are meant to get momentary high without going anywhere. Usually, the chances of reaching the planned destination are highest if the traveler takes a straight road. The chances are the least if they ri...

I had a chance to meet a small group of seasoned market participants yesterday. The group included a couple of brokers, some investors, a banker and a few analysts and advisors. After exchanging pleasantries and going through the mundanity of “ kya lagta hai ?” (what’s happening in the market?), the discussion veered around “what could go wrong to make Nifty fall 20% from the present level”. Not surprisingly, only one broker participant outrightly rejected the idea of a potential 20% correction in Nifty. He felt that the worst is over and it is going to be a blue sky scenario in 2023, with India continuing to lead the charge. None of the other participants was so sanguine, though. The surprising part however was to note the participants’ arguments to support their “expectation” of a major correction in Nifty, sometime in the next 6 months. The usual suspects like global slowdown, inflation, geopolitics, valuation and technically overbought were cited by everyone. In fact I have als...

Self-Reliance (Atamnirbharta) has been one of the key policy objective of Indian government, especially during the second term of the incumbent prime minister. It is clarified that self-reliance does not connotes self-centred systems; rather it encompasses a concern for the whole world’s happiness, cooperation and peace. The stated aim is to make the country and its citizens independent and self-reliant in all senses. The five primary focus area identified to achieve the objective of self-reliance are — Economy — Quantum jumps in various growth parameters, not just incremental changes. Infrastructure — Building infrastructure that represents modern India. Systems — Making systems technology driven. Demography — Making the population vibrant. Demand — Realizing full potential of the power of demand. A number of programs, schemes and incentives have been announced in past one year under the umbrella of Self-Reliant India, encompassing support to a variety of sectors like ag...

Besides other things one thing that the year 2020 has established is the need for global manufacturing to rebalance its over reliance on China. This need was being felt for past many years, but the following factored appeared to have reinforced this need in 2020: (a)   Major global economies like US, Japan and India took some aggressive tariffs and non-tariff measures to correct the imbalances in their trade with China. (b)   Pandemic induced mobility restrictions exposed the vulnerabilities in the global supply chain and prompted businesses to diversify their manufacturing more widely. (c)    Geopolitical aggression shown by Chinese establishment is now increasingly perceived as potent risk for global supply chain. Political unrest in Hong Kong has may have also embellished this perception. A recent survey conducted by UBS highlighted that “70% in the China CFO survey and 86% in the US CFO survey said they had moved or plan to move a part of t...