Will Murphy's law fail again?

Thought for the day

"Science never solves a problem without creating ten more."

—George Bernard Shaw (Irish, 1856-1950)

Word for the day

Suspiration (n)

A long, deep sigh

Malice towards none

If Lalu Yadav, who needs people to serve him in jail, is socialist, who is feudal in India?

First random thought this morning

“The world’s largest taxi firm, Uber, owns no cars. The world’s most popular media company, Facebook, creates no content. The world’s most valuable retailer, Alibaba, carries no stock. And the world’s largest accommodation provider, Airbnb, owns no property.” (Tom Goodwin)

The world is changing like never before, and some of us are busy debating who first discovered the Law of Gravity and banning movies. Someone needs to rise and tell the Rajasthan government "Ok, Brahamgupta-II, discovered the Law of Gravity some 500yrs before the apple fell on Isaac Newton's head. Get the history books and science almanacs rewritten. Charge Newton with crime of plagiarism. Celebrate the legend of Padmavati and kill your daughters in wombs so that they never need to perform Johar. Make sure no child dares think blasphemy like Brahamgupta, Newton or Galileo."

Will Murphy's law fail again?

In recent past there have been many instances when the Murphy's Law failed completely. There were so many things that could have gone wrong. But none actually did.
The moot point that now confronts me is should I take this defiance as an exception or a trend.

For example, with developed world largely standing at full employment level and historic low wage growth, would wages rise sharply or not?

It is pertinent to note here that it is for the first time in a decade that the world is forecast to grow faster in unison. This widespread growth is most likely to unite the central bankers, also for the first time since the global financial crisis (GFC), in their monetary policy stance. GFC saw all central bankers easing the policy in unison. This time we may see them tightening in unison. A glimpse of what this could mean for the global market was provided a couple of days ago when BoJ dropped a feeble hint of the shift in policy stance (see here)

The cost of capital ought to jump higher as growth aims to rise higher and liquidity gets constricted.

It is important to note here that the global leverage has risen materially in past 4-5years. But this leverage has not gone into building additional capacities. On the contrary, we have seen low growth forcing many capacities to shut down or curtailed.

2018 Global growth forecast; Source: Oxford Economics

With two major components of cost (wages and interest) rising, and supply of key commodities still constrained, the rise in inflation is inevitable.

The argument could be whether the spike will happen in 2018 or it may wait for some more time.

The following comments of Ex RBI governor Dr. Raghuram Rajan, who famously foresaw the 2008 GFC coming a couple of years ahead, made in a recent interview to Bloomberg are noteworthy in this context:

"Whenever there is asset price inflation you have to ask yourself, why is it there? And clearly there are some supports for it. Growth is strong for the first time across the world. You’re seeing Europe come back very strongly in the last few quarters and Japan is going the normal way it goes – a country with a labour force declining at one percent a year, for it to grow at one and a half percent every year is great. The U.S. is doing reasonably well. With all the engines firing, on the real side there is some optimism. The concerns have to do with two factors, one is the monetary side and second is the financial side. On the monetary side, when do we see inflation? If in fact you have strong growth, and economies at levels of unemployment not been seen for long, when do we see more wage inflation, when do we see that translate more into goods inflation, that’s the question on the monetary side.

When that happens, you will find interest rates picking up more strongly and that will have an effect on asset prices. The other factor is the financial side. How much debt have we built up in these go-go years. On the retail side, the government side, the corporate side? Covenant-lite loans are at an all time high at this point of time. The question is at that point when interest rates start picking up, when liquidity seems a little less available than it is now, do we see a substantial reaction on the financial side?"

"I think as you remove monetary accommodation, you signal also that the financial side needs to adapt and you give it time to adapt which is Important. So the buildup of leverage that you see, both the Implicit leverage in positions as well as the explicit leverage in debt, I think that will start tapering off if in fact there is a signal that accommodation will be taken off."

There is a strong view that the respective governments may not like the monetary policies to be tighten as it may not be congruent to their political ambitions. The fear is that more and more government may move to compromise the autonomy of central bankers to suit their political ends. I do not feel strongly about this possibility. But if this fear does materializes, this may have disastrous outcome. The hyperinflationary expectations of 2009-10 shall be definitely met in 2019-20, in this scenario.

There is another argument that there are no structural conditions prevailing for the inflationary pressure to sustain for long. Therefore any episode of high inflation shall be brief and passing.

I mostly agree with this assessment. The ageing demography, rising economic inequalities, move towards complete dematerialization of transactions, automation of processes, digitalization of retail trade, energy efficiency and focus on renewable, a good proportion of capacities lying idle or underutilized, etc. are some of the factors that shall keep the inflation low structurally for a long time, perhaps till a major war breaks out and destroys a good part of the present day economic infrastructure.

I therefore believe that any panic reaction due to rise in cost of capital and core inflation, shall still be an opportunity to buy risk assets.

To conclude, I would like to quote the following note of caution sounded by UBS's Larry Hathway:

"The maximum damage from inflation comes if it is unexpected or if it is unpredictable. Unexpected inflation causes damage, because the investor who holds bonds yielding 1% for a decade is going to feel cheated if inflation turns out to be 1000%. Of course, no one would voluntarily buy 1% yielding bonds if 1000% inflation was expected. Thaler’s Law comes into operation here; people dislike losing money more than they like making money. As a result episodes of unexpected inflation will lead to a significant adverse reaction on the part of consumers."

VIX vs. Gold

Thought for the day

"Beware of the man who does not return your blow: he neither forgives you nor allows you to forgive yourself."

—George Bernard Shaw (Irish, 1856-1950)

Word for the day

Stardust (n)

A naively romantic quality, e.g., There was stardust in her eyes.

Malice towards none

The order of nature is that nights are for resting and days are for working.

Should government consider criminalizing all night shift work and order shutting down 24x7 call centers?

First random thought this morning

As per media reports, a Kolkata based steel company facing bankruptcy proceedings has received huge interest from potential suitors. The best bet received so far reportedly implies a 55% haircut for the lenders. The stock price of the company has gained 67% since September 2017.

The primary principle of limited liability company form of business is that in case of insolvency the equity shareholders get paid in the end after satisfying all the liabilities of the company. So, if the lenders take 55% hit, should not the equity shareholders must get 100% hit. If yes, why the company's stock is trading at just 36% discount to the face value. And also, why is it being allowed to trade in the first place?

VIX vs. Gold

The following three most popular Chinese curses are worth remembering by investors at all times, viz—

1.         May you live in interesting times

2.         May you attract the attention of the government

3.         May you find what you're looking for

The times are certainly interesting. Brexit widely predicted as a disaster for the global markets, has not created many ripples so far. The threat of material rise in right wing fundamentalist forces across Europe and US has not materialized. Donald Trump, popularly seen as a disaster for global trade and geopolitics, is not doing as bad. Cryptocurrencies are seeking to challenge gold and USD as global currencies and not CNY. Unprecedented and humongous amount of money printing has not created any inflation. Despite all the noises, the world has not witnessed any significant geopolitical escalation. The stray cases of terrorist attacks in Europe and US have been tolerated peacefully without any reckless reaction.

Back home, the right wing BJP has gained political dominance that was only enjoyed by Congress in early days of post independence period. The Congress and other socialist parties have been totally decimated. But, regardless of the rhetorical debates in mainstream media and election rallies, there is little sign of any unusual civil unrest. Religious riots are also limited to prime time TV debates.

Secondly, the government attention has certainly increased in the post global financial crisis (GFC) world. Money laundering, tax evasion, and other non-compliance have become difficult. Tighter regulations, improved surveillance, stricter supervision and better coordination has certainly made the life of people enjoying easy money rather fearful.

Inflation is one of the things, that a number of central bankers, regulators, investors and businesses have been looking for. There are enough indications to suggest that they may finally get this in next few quarters.

To the seasoned and grey haired this may seem like an usual economic cycle. But the problem shall arise for the young and dynamic. These are the people who entered the markets in last decade or so. These people have not experienced hyperinflation, rise in rates, bond prices falling materially, tighter liquidity, growth collapsing when everything looked poised for a spectacular rally and the picture on the economic canvass turns purple from pink. And the problem for the market is that these young Turks in their 30s are in overwhelming majority everywhere.

So when people ask me, why you are worried about inflation, I tell them, its not the inflation per se I am worried about. I am worried about the panic reaction that it may invoke amongst the unsuspecting. The best hedge for inflation therefore may not be gold this time. I would rather prefer VIX puts....to continue tomorrow

Inflation may return to haunt markets

Thought for the day

"I am a Christian. That obliges me to be a Communist."

—George Bernard Shaw (Irish, 1856-1950)

Word for the day

Horsefeathers (n)

Something not worth considering or bothering

Malice towards none

As Buddhist people say "Right now, it's like this!"

 

First random thought this morning

I travelled to Uttrakhand hills through Western UP plains for 10days. Talking to people on the way, I noticed three things:

1.    It's just 14months, and the pain of demonetization has mostly faded from people's memory, regardless of how hard opposition parties and a section of media is trying to keep the issue alive till next election.

2.    There no palpable rise in strife between Hindu and Muslim communities. Their relation is as tense, or as easy if you like, as they were prior to BJP forming governments in both the states.

3.    The standing Rabi crop looks very good in both the states.

Inflation may return to haunt markets

Many readers have sought clarifications on my outlook and strategy for 2018 outlined in an earlier post (see here). I shall be answering most of these queries through my subsequent posts.

A large number of queries arise from the recent sharp rally in stock prices of commodity, especially metals, companies' stock prices. People seem concerned about the sustainability of the stock rally and the overall inflation outlook.

My view on commodity prices and inflation can be stated in very simple terms as follows:

Since the last global financial crisis (GFC), the world has not witnessed any instance of damaging inflation. Most developed countries and their central bankers, most notably Fed, ECB and BoJ, have unsuccessfully struggled to create reasonable inflation of 2% for all these years. Some emerging markets have witnessed intermittent bouts of inflation. But most of these episodes were due to temporary or seasonal supply shocks rather than due to a trend.

The situation has been quite paradoxical in many ways. A overwhelmingly large number of economists and analysts had anticipated hyperinflationary conditions to emerge after central bankers took to the unconventional path to the monetary policy management. Unprecedented printing of fresh money (quantitative easing) should have normally fueled inflation higher. But that has not happened. The primary reason for this could be very low velocity of money, that may have prevented extra money to result in higher money supply.

The commodity prices collapsed to multi decade lows. Gold prices have remained subdued. And the feared currency war did not happen. Bond prices rose to ridiculous levels, even the issuance by the troubled economies of peripheral Europe.

The things have however changed since the process of policy normalization has begun last year, led by US Fed. In 2018 both ECB and BoJ also expected to begin the normalization process.

Commodity prices have gained significantly in past year or so, driven by-

(a)        Growth recovery in developed economies;

(b)        Capacity shut down due to unviability or environmental concerns;

(c)        Oil production curtailment by OPEC and its allies;

(d)        Poor investment in capacity addition.

If the current conditions sustain, there is a strong likelihood that still strong global liquidity may fuel money supply as the velocity of money rises on growth pick up. This in conjunction with curtailed supplies shall lead to the hyperinflationary conditions that most economists have been waiting for since 2009!...to continue tomorrow

2018 - will PE de-rate

Thought for the day

"In heaven an angel is nobody in particular."

—George Bernard Shaw (Irish, 1856-1950)

Word for the day

Propine (v & n)

To offer as a present

Present, Gift

Malice towards none

Why do we and why should we celebrate a change in date on the night of 31st December?

Besides calendars, what else changes on this day?

First random thought this morning

First thing in the morning, messages in my WhatsApp inbox make me feel guilty by convincing me that I am not doing enough for my elders, culture, religion and the Nation. Then tweets of so called liberals and elites multiply the guilt by suggesting that in our country caste of a person should be the supreme criteria for deciding his/her eligibility to hold any constitutional post. My pail of guilt begins to overflow as soon as I open the newspaper and learn how badly we are treating our medal winning athletes, how we are unable to safeguard numerous young girls from being brutally raped and killed, what kind of primitive dogma our politicians are preaching in a rather uncivilized language and manner. The pail of guilt finally ruptures when I watch prime time TV news. I go to sleep having spilled all my guilt down the gutter.

Tomorrow would be another day and the wheel of time will keep spinning, tirelessly, without change.

An Investor's Diary

The return on investment in publically traded equity is broadly a function of 3 factors (a) earnings growth; (b) changes in price earnings (PE) ratio and (c) dividend. Amongst these earnings growth is primary driver for a sustainable up move in equity prices. The higher PE ratio and dividend yield usually follow the higher earnings trajectory.

The 100%+ gain in benchmark indices since August 2013, when the macro improvement cycle began, is mostly a function of PE re-rating; for corporate earnings have shown little growth. Moreover, whatever improvement in earnings is seen, it could be mostly attributed to cost savings (especially financing cost and raw material advantage). There is little evidence of improvement in pricing power or significantly higher productivity of capital.

The macro improvement cycle is almost over. Financing cost and raw material prices are showing a distinct upward incline. The foreign flows have also shown a reversal trend in past few months.

It can therefore reasonably be assumed that the PE re-rating cycle is mostly over. Any improvement in equity returns from this point onward will have to be driven entirely by earnings growth.

The corporate fundamentals would need to show material improvement over next 9-12 months to sustain the present valuation levels.

The current implied earnings growth over FY19-FY20 is well over 20%. If we consider the historical perspective, in a rising rate, rising inflation, scenario the earnings growth of over 20% has not been sustainable. Even if we can manage this kind of earnings growth (not my base case) due to very low base (almost no growth for over 3yrs now), FY20 could be a challenge.

 

I therefore expect a PE de-rating in 2018. Financials and capex would be the theme that should suffer the most.

 

 

 

2018-Macro outlook

Thought for the day

"Old men are dangerous: it doesn't matter to them what is going to happen to the world."

—John Milton (English, 1608-1674)

Word for the day

Facepalm (n)

The gesture of placing the palm of one's hand across the face, as to express embarrassment, frustration, disbelief, etc. Often used as an interjection, e.g., "She read the post and comments and did a facepalm.

Malice towards none

If a Muslim or Christian converts to Hinduism, who decides which caste and Varna (Brahmin, Kshtriya, etc.) he would take?

First random thought this morning

The summary dismissal of infamous 2G case by the special CBI court, highlights a number important issues. The most important in my view, is pathetic and blatant disregard for the "bail is a right" rule. Many accused, who happen to be famous and reputed people in their own field, were apparently incarcerated without any substantial reason or evidence. This was seen in the famous Aryushi case also, where the parents were put behind bars on flimsy grounds, without any tenable evidence.

There have been numerous cases where the morality of the issue involved and media TRP of the case has taken precedence over the legality of the material on record.

We need a stronger law on perjury, reparation for the wrongly accused, and constitutional autonomy (on the lines of Election Commission) for the federal investigating agencies (CBI, NIA, and ED).

2018-Macro outlook

The improvement seen in macroeconomic indicators, like twin deficit, inflation and rates during past couple of years, seems to have peaked. Though the consensus forecast so far is not indicating any dramatic deterioration in the macroeconomic environment, most of the economists are hedging their bets by highlighting the political risk. Particularly, in the aftermath of the Gujarat election results, a common fear is that the government may go soft on disruptive reforms and policies may be given a populist hue ahead of key assembly elections in 2018 in run up to the 2019 general elections.

Globally also, there is a general sentiment of economic optimism. From the Fed's action in 2017 and guidance for 2018, most economists are drawing comfort that the normalization of the monetary policy may not be disorderly.

With this background, my outlook for the likely macroeconomic environment in 2018 is as follows:

(a)   Inflation: The consumer inflation may continue to remain above the RBI target of 4% for most part of the year. The core inflation may rise on the back of higher raw material prices and wages. Imported inflation shall remain elevated as global commodity prices remain strong.

(b)   Fiscal Deficit: The government may persist with FRBM targets compromising with public investment and consumption. Expect the present trend of delay in payment of subsidies, tax refunds and contractors' payment to continue in 2018 as well. The systemic liquidity may thus remain constrained most part of 2018.

(c)    Rates: Expect benchmark yields to average above 7% for the year. RBI may hold policy rates during 1H2018, but if inflationary pressures persist a hike could be considered. Deposit rates may firm up further as systemic liquidity remains tight.

(d)   Current Account: Expect current account to worsen on the back of rise in energy import and sluggish export growth.

(e)    Savings: Household saving may grow at slower pace as real wage growth remains poor. Corporate savings though may be higher due to continued deleveraging and rise in free cash flows.

(f)    Investment: The government investment expenditure may see some slow down due to fiscal constraints and higher allocation to social sector ahead of elections. Private capex may see recovery in some sectors as like consumption and commodities. Poor capacity utilization may however keep overall investment growth under check.

(g)    Exchange Rate: USDINR may remain stable as higher yields continue to support inflows. Funding BoP should not be a problem at all.

(h)   Growth: Expect higher rates to hit real GDP growth in first half. In 2H2018, we may see growth recovering to 7.25% as GST benefits begin to kick in.

2017 in perspective

Thought for the day

"Take care to get what you like or you will be forced to like what you get."

—John Milton (English, 1608-1674)

Word for the day

Daily-Breader (n)

A commuter

Malice towards none

Besides UP CM, PM and BJP President, can you name two more BJP leaders who campaigned in Gujarat and Himachal Pradesh?

For sure, there must be many. The question is why aren't they visible to us!

First random thought this morning

Suddenly there is a rush in stock market to buy stocks of the company who may benefit from rise in rural income. People are buying FMCG producers, farm equipment and farm input manufacturers, automobile OEMs, as if from tomorrow morning Modi government will start depositing the promised Rs15lacs in the savings accounts of everyone.

If we accept that our markets were fairly valued on 18th December, than every sudden 20% rise in price of a stock must be matched by 20% increment in the earnings forecast, over and above the previous forecast!

Oh what fun it is to ride an one horse open sleigh!

2017 in perspective

The 2017th year of the Christ, was quite an eventful year for the global economy and financial markets especially. For the first time since global financial crisis, the financial markets appeared excited.

A large number of global indices scaled new highs. Industrial commodities staged a smart recovery. Europe did not present any challenge to the global economy. No significant Brexit driven disruption were seen. Politically French and German elections did not throw any surprise. China ushered into a new "Xi Era". The new kid on the block, Bitcoin, surprised almost everyone with the ferocity of its ascent. OPEC and Russia solidarity survived beyond most expectations, leading to stable energy markets.

Central Bankers sounded more confident about recovery and appeared ready to embark on the path to normalize the monetary policy exceptions made to ward off the global financial crisis. Most notably, US Fed hiked rates thrice and guided for contraction of its balance sheet.

Despite all skepticism, Trump survived all challenges, and is all set to deliver on his major poll promise of tax reforms. He could also make significant progress on immigration reforms.

Middle East mostly remained peaceful. All hotspots like Iran, Gaza, Iraq, Turkey, Syria, Yemen, et. al. remained contained and did not present any threat of escalation.

North Korea was perhaps the only irritant that bothered global peace a few times during the year. But that threat perception also seems to have dissipated in recent weeks. The markets are mostly ignoring any fresh provocation from the maverick Kim Jong Un.

For records:

(a)   Benchmark Nifty gained ~28% during the year. Its best performance since 2014. The return in broader markets did much better. Small cap ~50% and Midcap ~42% outperformed the benchmark significantly. The top small and midcap fund returned 75% for the year, whereas the top large cap fund returned 45%. The managed assets industry had one of the best year in more than a decade.

(b)   Global commodities are ending the year marginally lower on yoy basis. However, most commodities witnessed sharp rise in 2HCY17, after falling to multiyear lows in 1HCY17. Crude and Copper were two notable gainers.

(c)    Benchmark bond yields rose ~10% (yoy), with 10yr Gsec yields rising from 6.6% to 7.2%. Bond and income fund returns were therefore averaged less than 5-8% for the year. Deposit rates witnessed marginal rise. Gold fund returned about 2.5% during the year.

(d)   The home price bottomed and showed a moderate growth as new launches fell sharply.

Politically, BJP led by PM Modi strengthened its position significantly. BJP formed government in the largest state UP with overwhelming majority. It also joined the government in the second most populous state Bihar, as JDU parted ways with alliance partners RJD & Congress and joined NDA. It won Gujarat assembly for the record sixth time, retained Goa, regained Himachal Pradesh by defeating incumbent Congress and managed to form governments in Manipur and Arunachal Pradesh, significantly consolidating its position in the strategically important North Eastern region.

As of this morning, BJP rules 14 States on its own and another 5 states with its NDA allies. The principal national opposition Congress Party is now confined to just four states (out of which three would go to election in 2018) and one union territory.

With this background and perspective, I shall share my assessment, outlook and strategy for 2018 in coming days.

It's all economics stupid!

Thought for the day

"Nothing profits more than self-esteem, grounded on what is just and right."

—John Milton (English, 1608-1674)

Word for the day

Deasil (adv)

Clockwise or in a direction following the apparent course of the sun: considered as lucky or auspicious.

Malice towards none

Manish Tiwari + Kapil Sibal + Digvijay Singh + Manishankar Aiyer + et. al. = Sambit Patra

First random thought this morning

The desperation shown by BJP in the ongoing Gujarat elections is completely beyond comprehension.

This election is a fight of survival for the Congress Party. Whereas for BJP it should have been just another election. If Congress were to lose this election, like Bihar, UP, TN, WB, they would have lost another state forever, as the a local alternative is likely to emerge by 2022. Whereas, if PM had not invested his personal ego there, the BJP could have been easily assigned the adverse outcome to the local leadership's failure in carrying forward NaMo's legacy.

But as things stand today, Congress is at win-win situation, and BJP may just get an pyrrhic victory.

It's all economics stupid!

The common understanding is that the market price of an asset is function of demand and supply for such asset at that point in time.

The demand and supply for physical assets, e.g., real estate, metals etc., is relatively less volatile and therefore more predictable, as compared to the financial assets.

The financial assets are more liquid, mostly dematerialized (not needing any physical transfer), well regulated and easy to transact. The market for these assets therefore see wider participation. Especially in case of stock markets, people from cross sections of the society transact. A vast majority of these traders/investors may not have any relation to, or practical experience of, the underlying businesses they are transacting in.

Even the professional portfolio managers mostly rely on the opinions of the business analysts who may only have "the acquired" knowledge of the underlying businesses. In fact a lot of analysts are seen acquiring the business knowledge purely through the "management guidance" and related "material easily available on internet" or from various "research vendors". The conviction in "the equity trade" is therefore usually much lower than transaction in the related physical asset. (Trivia: Imagine you being treated by a self trained medical professional, who acquired skills through internet searches and interacting with other medical professionals, some of which were like him only)

The demand-supply equilibrium in this case is therefore too unpredictable and may shift dramatically in very short term, apparently for no relevant reason.

It is not surprising that in the case of stock markets, many times the demand and supply equilibrium does not necessarily reflect the underlying business fundamentals. The collective wisdom of the participants here is materially influenced by the emotions and constraints of third parties.

For example, the actions of a fund manager may be influenced by the emotions of the ultimate investor. Similarly, the action of a trader may be materially influenced by the lender who has financed his transaction.

This divergence of market price and business fundamentals is seen by many as an opportunity to make extraordinary profit, based on assumption that market price and business fundamentals will eventually converge. In common market parlance these people are referred as "contrarian investors".

Many contrarian investors have made big fortunes from their investing style. But the fact is that in many cases, the money they made may have just been a function of their ability to stay invested through the market cycle, rather than anything else.

Sharp market movements due to political events, is just another case of a completely unrelated and irrelevant factor influencing the market prices.

If anyone mentions the political changes (or lack of it) as a risk for a business and therefore market, he/she may just not have any understanding of the basic principles of investing.

For example, if someone believes that a particular company based in Gujarat is doing well because of the patronage of BJP government in the state, and may face trouble due to change in political regime, he should never have invested in such a business, in the first place. A business that is contingent upon political patronage to survive and grow, could not be investment grade by any standard.

Similarly, if someone believes that NDA lose in 2019 elections could be disastrous for the economy, and therefore stock markets, is only too naive. There is absolutely no empirical evidence of a particular party or person driving the economy or markets in a democratic setup, anywhere in the world.

In fact, an in-depth research would show that most government economic policies are driven by businesses, and not vice versa.

Beyond political rhetoric, analyze the following instances:

(a)   FDI in insurance and pension was politically a massive contentious issue for over two decades. But, when it did happen, there was not even a token protest. The reason is that for two decade, FDI in insurance was only a theoretical probability. Given the level of accessibility (roads, communication connectivity, banking etc) and affordability, no one would have been seriously interested in investing in this business.

Same is true with FDI in retail trade also. Imagine how a global retail store would have functioned in India with pathetic internet speed, poor electricity supply, multitude of complex taxation laws, movement restrictions etc.

(b)   How GST could have happened 10yrs ago, when the fiber connectivity was still poor and banking infrastructure pathetic.

(c)    Gujarat could not have become an export hub for automobile and import hub for hydrocarbons, if the ports at Mundra, Dahej and Kandla were not developed. The Narmada dam and Bt Cotton have changed the fortune of Gujarat farmers, not any political party. (If someone wants to argue that any particular party made Bt Cotton and Sardar Sarovar happen, I am not at all interested in listening. I find this argument perverse and violent.)

In past two weeks, no one has asked me about the deteriorating macroeconomic fundamentals and falling FPIs interest in Indian equities. All that I see in my mail box is who will win Gujarat elections and how market will react to this.

I have patiently answered all the queries. But my strong belief remains that elections are totally irrelevant and unrelated event. Totally not worth bothering about.